Correlation Between Adocia and Touax SCA

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

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

Diversification Opportunities for Adocia and Touax SCA

-0.9

Correlation Coefficient

Adocia  Touax SCA

Pay attention - limited upside

The 3 months correlation between Adocia and Touax is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Touax SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touax SCA 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 Touax SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touax SCA has no effect on the direction of Adocia i.e., Adocia and Touax SCA go up and down completely randomly.

Pair Corralation between Adocia and Touax SCA

Assuming the 90 days trading horizon Adocia is expected to under-perform the Touax SCA. In addition to that, Adocia is 1.5 times more volatile than Touax SCA. It trades about -0.19 of its total potential returns per unit of risk. Touax SCA is currently generating about 0.13 per unit of volatility. If you would invest  373.00  in Touax SCA on December 29, 2024 and sell it today you would earn a total of  72.00  from holding Touax SCA or generate 19.3% return on investment over 90 days.

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

Adocia  vs.  Touax SCA

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Touax SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touax SCA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Touax SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adocia and Touax SCA

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

The idea behind Adocia and Touax SCA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.