Correlation Between Audax Renovables and Grenergy Renovables

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

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

Diversification Opportunities for Audax Renovables and Grenergy Renovables

0.06

Correlation Coefficient

Audax Renovables  Grenergy Renovables

Significant diversification

The 3 months correlation between Audax and Grenergy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Audax Renovables SA and Grenergy Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenergy Renovables and Audax Renovables 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 Audax Renovables SA are associated (or correlated) with Grenergy Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenergy Renovables has no effect on the direction of Audax Renovables i.e., Audax Renovables and Grenergy Renovables go up and down completely randomly.

Pair Corralation between Audax Renovables and Grenergy Renovables

Assuming the 90 days trading horizon Audax Renovables SA is expected to under-perform the Grenergy Renovables. But the stock apears to be less risky and, when comparing its historical volatility, Audax Renovables SA is 1.38 times less risky than Grenergy Renovables. The stock trades about -0.03 of its potential returns per unit of risk. The Grenergy Renovables SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,220  in Grenergy Renovables SA on December 30, 2024 and sell it today you would earn a total of  810.00  from holding Grenergy Renovables SA or generate 25.16% return on investment over 90 days.

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

Audax Renovables SA  vs.  Grenergy Renovables SA

Audax Renovables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Audax Renovables SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Audax Renovables is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grenergy Renovables

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grenergy Renovables SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grenergy Renovables exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Audax Renovables and Grenergy Renovables

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

The idea behind Audax Renovables SA and Grenergy Renovables 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.