Correlation Between Entech SE and Hydrogene

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

By analyzing existing cross correlation between Entech SE SAS and Hydrogene De France, you can compare the effects of market volatilities on Entech SE and Hydrogene 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 Entech SE with a short position of Hydrogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entech SE and Hydrogene.

Diversification Opportunities for Entech SE and Hydrogene

-0.01

Correlation Coefficient

Entech SE  Hydrogene

Good diversification

The 3 months correlation between Entech and Hydrogene is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE SAS and Hydrogene De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrogene De France and Entech SE 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 Entech SE SAS are associated (or correlated) with Hydrogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrogene De France has no effect on the direction of Entech SE i.e., Entech SE and Hydrogene go up and down completely randomly.

Pair Corralation between Entech SE and Hydrogene

Assuming the 90 days trading horizon Entech SE is expected to generate 1.03 times less return on investment than Hydrogene. But when comparing it to its historical volatility, Entech SE SAS is 1.79 times less risky than Hydrogene. It trades about 0.08 of its potential returns per unit of risk. Hydrogene De France is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  405.00  in Hydrogene De France on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Hydrogene De France or generate 1.23% return on investment over 90 days.

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

Entech SE SAS  vs.  Hydrogene De France

Entech SE SAS

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entech SE SAS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Entech SE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hydrogene De France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrogene De France 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Entech SE and Hydrogene

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

The idea behind Entech SE SAS and Hydrogene De France 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.