Correlation Between Europlasma and Derichebourg

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

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

Diversification Opportunities for Europlasma and Derichebourg

-0.77

Correlation Coefficient

Europlasma  Derichebourg

Pay attention - limited upside

The 3 months correlation between Europlasma and Derichebourg is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg 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 Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Europlasma i.e., Europlasma and Derichebourg go up and down completely randomly.

Pair Corralation between Europlasma and Derichebourg

Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Derichebourg. In addition to that, Europlasma is 3.98 times more volatile than Derichebourg. It trades about -0.31 of its total potential returns per unit of risk. Derichebourg is currently generating about 0.15 per unit of volatility. If you would invest  437.00  in Derichebourg on December 2, 2024 and sell it today you would earn a total of  106.00  from holding Derichebourg or generate 24.26% return on investment over 90 days.

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

Europlasma SA  vs.  Derichebourg

Europlasma SA

Risk-Adjusted Performance

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

Derichebourg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Derichebourg sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europlasma and Derichebourg

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

The idea behind Europlasma SA and Derichebourg 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 Stocks Directory module to find actively traded stocks across global markets.