Correlation Between Adocia and Euronext

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

By analyzing existing cross correlation between Adocia and Euronext NV, you can compare the effects of market volatilities on Adocia and Euronext 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 Euronext. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and Euronext.

Diversification Opportunities for Adocia and Euronext

-0.81

Correlation Coefficient

Adocia  Euronext

Pay attention - limited upside

The 3 months correlation between Adocia and Euronext is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Euronext NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronext NV 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 Euronext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronext NV has no effect on the direction of Adocia i.e., Adocia and Euronext go up and down completely randomly.

Pair Corralation between Adocia and Euronext

Assuming the 90 days trading horizon Adocia is expected to under-perform the Euronext. In addition to that, Adocia is 3.42 times more volatile than Euronext NV. It trades about -0.2 of its total potential returns per unit of risk. Euronext NV is currently generating about 0.33 per unit of volatility. If you would invest  10,830  in Euronext NV on December 31, 2024 and sell it today you would earn a total of  2,410  from holding Euronext NV or generate 22.25% return on investment over 90 days.

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

Adocia  vs.  Euronext NV

Adocia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adocia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Euronext NV

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Euronext sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adocia and Euronext

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

The idea behind Adocia and Euronext NV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.