Correlation Between TRAINLINE PLC and JCDecaux

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and JCDecaux at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TRAINLINE PLC and JCDecaux into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRAINLINE PLC LS and JCDecaux SA, you can compare the effects of market volatilities on TRAINLINE PLC and JCDecaux and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TRAINLINE PLC with a short position of JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and JCDecaux.

Diversification Opportunities for TRAINLINE PLC and JCDecaux

-0.76

Correlation Coefficient

TRAINLINE PLC  JCDecaux

Pay attention - limited upside

The 3 months correlation between TRAINLINE and JCDecaux is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA and TRAINLINE PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TRAINLINE PLC LS are associated (or correlated) with JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and JCDecaux go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and JCDecaux

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 1.25 times more return on investment than JCDecaux. However, TRAINLINE PLC is 1.25 times more volatile than JCDecaux SA. It trades about 0.07 of its potential returns per unit of risk. JCDecaux SA is currently generating about -0.01 per unit of risk. If you would invest  328.00  in TRAINLINE PLC LS on October 8, 2024 and sell it today you would earn a total of  164.00  from holding TRAINLINE PLC LS or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TRAINLINE PLC LS  vs.  JCDecaux SA

TRAINLINE PLC LS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAINLINE PLC LS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAINLINE PLC reported solid returns over the last few months and may actually be approaching a breakup point.

JCDecaux SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCDecaux SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRAINLINE PLC and JCDecaux

The main advantage of trading using opposite TRAINLINE PLC and JCDecaux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, JCDecaux can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JCDecaux will offset losses from the drop in JCDecaux's long position.

The idea behind TRAINLINE PLC LS and JCDecaux SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.