Correlation Between Adocia and Arcure SA

Can any of the company-specific risk be diversified away by investing in both Adocia and Arcure SA 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 Adocia and Arcure SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adocia and Arcure SA, you can compare the effects of market volatilities on Adocia and Arcure SA 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 Adocia with a short position of Arcure SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and Arcure SA.

Diversification Opportunities for Adocia and Arcure SA

-0.47

Correlation Coefficient

Adocia  Arcure SA

Very good diversification

The 3 months correlation between Adocia and Arcure is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Arcure SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcure SA and Adocia 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 Adocia are associated (or correlated) with Arcure SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcure SA has no effect on the direction of Adocia i.e., Adocia and Arcure SA go up and down completely randomly.

Pair Corralation between Adocia and Arcure SA

Assuming the 90 days trading horizon Adocia is expected to generate 5.54 times less return on investment than Arcure SA. In addition to that, Adocia is 1.23 times more volatile than Arcure SA. It trades about 0.02 of its total potential returns per unit of risk. Arcure SA is currently generating about 0.12 per unit of volatility. If you would invest  213.00  in Arcure SA on August 31, 2024 and sell it today you would earn a total of  367.00  from holding Arcure SA or generate 172.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Adocia  vs.  Arcure SA

Adocia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adocia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adocia sustained solid returns over the last few months and may actually be approaching a breakup point.

Arcure SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcure SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Arcure SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Adocia and Arcure SA

The main advantage of trading using opposite Adocia and Arcure SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adocia position performs unexpectedly, Arcure SA 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 Arcure SA will offset losses from the drop in Arcure SA's long position.

The idea behind Adocia and Arcure 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.