Correlation Between Glob Bioenergi and Arkema SA

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

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

Diversification Opportunities for Glob Bioenergi and Arkema SA

0.39

Correlation Coefficient

Glob Bioenergi  Arkema SA

Weak diversification

The 3 months correlation between Glob and Arkema is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Glob Bioenergi and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and Glob Bioenergi 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 Glob Bioenergi are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of Glob Bioenergi i.e., Glob Bioenergi and Arkema SA go up and down completely randomly.

Pair Corralation between Glob Bioenergi and Arkema SA

Assuming the 90 days trading horizon Glob Bioenergi is expected to generate 2.16 times more return on investment than Arkema SA. However, Glob Bioenergi is 2.16 times more volatile than Arkema SA. It trades about 0.07 of its potential returns per unit of risk. Arkema SA is currently generating about -0.16 per unit of risk. If you would invest  83.00  in Glob Bioenergi on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Glob Bioenergi or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Glob Bioenergi  vs.  Arkema SA

Glob Bioenergi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glob Bioenergi 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Arkema SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkema SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Glob Bioenergi and Arkema SA

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

The idea behind Glob Bioenergi and Arkema 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.