Correlation Between Europlasma and Adomos SA

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

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

Diversification Opportunities for Europlasma and Adomos SA

0.05

Correlation Coefficient

Europlasma  Adomos SA

Significant diversification

The 3 months correlation between Europlasma and Adomos is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Adomos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adomos SA and Europlasma 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 Europlasma SA are associated (or correlated) with Adomos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adomos SA has no effect on the direction of Europlasma i.e., Europlasma and Adomos SA go up and down completely randomly.

Pair Corralation between Europlasma and Adomos SA

Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Adomos SA. In addition to that, Europlasma is 1.11 times more volatile than Adomos SA. It trades about -0.02 of its total potential returns per unit of risk. Adomos SA is currently generating about 0.0 per unit of volatility. If you would invest  2.40  in Adomos SA on October 7, 2024 and sell it today you would lose (2.38) from holding Adomos SA or give up 99.17% of portfolio value over 90 days.

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

Europlasma SA  vs.  Adomos SA

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Adomos SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adomos SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adomos SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europlasma and Adomos SA

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

The idea behind Europlasma SA and Adomos 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..