Correlation Between Acheter Louer and Europlasma

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

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

Diversification Opportunities for Acheter Louer and Europlasma

0.74

Correlation Coefficient

Acheter Louer  Europlasma

Poor diversification

The 3 months correlation between Acheter and Europlasma is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Acheter Louer and Europlasma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europlasma SA and Acheter Louer 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 Acheter Louer are associated (or correlated) with Europlasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europlasma SA has no effect on the direction of Acheter Louer i.e., Acheter Louer and Europlasma go up and down completely randomly.

Pair Corralation between Acheter Louer and Europlasma

Assuming the 90 days trading horizon Acheter Louer is expected to under-perform the Europlasma. But the stock apears to be less risky and, when comparing its historical volatility, Acheter Louer is 2.12 times less risky than Europlasma. The stock trades about -0.19 of its potential returns per unit of risk. The Europlasma SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Europlasma SA on September 7, 2024 and sell it today you would lose (10.24) from holding Europlasma SA or give up 68.27% of portfolio value over 90 days.

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

Acheter Louer  vs.  Europlasma SA

Acheter Louer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acheter Louer has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Europlasma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europlasma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Acheter Louer and Europlasma

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

The idea behind Acheter Louer and Europlasma 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.