Correlation Between Europlasma and Solocal Group
Can any of the company-specific risk be diversified away by investing in both Europlasma and Solocal Group 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 Solocal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europlasma SA and Solocal Group SA, you can compare the effects of market volatilities on Europlasma and Solocal Group 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 Solocal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europlasma and Solocal Group.
Diversification Opportunities for Europlasma and Solocal Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Europlasma and Solocal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group 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 Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Europlasma i.e., Europlasma and Solocal Group go up and down completely randomly.
Pair Corralation between Europlasma and Solocal Group
Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Solocal Group. In addition to that, Europlasma is 5.5 times more volatile than Solocal Group SA. It trades about -0.01 of its total potential returns per unit of risk. Solocal Group SA is currently generating about -0.03 per unit of volatility. If you would invest 290.00 in Solocal Group SA on September 8, 2024 and sell it today you would lose (33.00) from holding Solocal Group SA or give up 11.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.48% |
Values | Daily Returns |
Europlasma SA vs. Solocal Group SA
Performance |
Timeline |
Europlasma SA |
Solocal Group SA |
Europlasma and Solocal Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Europlasma and Solocal Group
The main advantage of trading using opposite Europlasma and Solocal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europlasma position performs unexpectedly, Solocal Group 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 Solocal Group will offset losses from the drop in Solocal Group's long position.The idea behind Europlasma SA and Solocal Group 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.Solocal Group vs. Vallourec | Solocal Group vs. Genfit | Solocal Group vs. Innate Pharma | Solocal Group vs. Etablissements Maurel et |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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