Correlation Between Europlasma and Groupe Pizzorno

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

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

Diversification Opportunities for Europlasma and Groupe Pizzorno

-0.8

Correlation Coefficient

Europlasma  Groupe Pizzorno

Pay attention - limited upside

The 3 months correlation between Europlasma and Groupe is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Groupe Pizzorno Environnement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Pizzorno Envi 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 Groupe Pizzorno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Pizzorno Envi has no effect on the direction of Europlasma i.e., Europlasma and Groupe Pizzorno go up and down completely randomly.

Pair Corralation between Europlasma and Groupe Pizzorno

Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Groupe Pizzorno. In addition to that, Europlasma is 12.06 times more volatile than Groupe Pizzorno Environnement. It trades about -0.01 of its total potential returns per unit of risk. Groupe Pizzorno Environnement is currently generating about 0.09 per unit of volatility. If you would invest  3,402  in Groupe Pizzorno Environnement on September 4, 2024 and sell it today you would earn a total of  4,578  from holding Groupe Pizzorno Environnement or generate 134.57% return on investment over 90 days.

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

Europlasma SA  vs.  Groupe Pizzorno Environnement

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 relatively weak basic indicators, Europlasma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Groupe Pizzorno Envi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Pizzorno Environnement are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Groupe Pizzorno is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europlasma and Groupe Pizzorno

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

The idea behind Europlasma SA and Groupe Pizzorno Environnement 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.