Correlation Between Grolleau SAS and Icape Holding

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

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

Diversification Opportunities for Grolleau SAS and Icape Holding

-0.44

Correlation Coefficient

Grolleau SAS  Icape Holding

Very good diversification

The 3 months correlation between Grolleau and Icape is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grolleau SAS and Icape Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icape Holding and Grolleau SAS 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 Grolleau SAS are associated (or correlated) with Icape Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icape Holding has no effect on the direction of Grolleau SAS i.e., Grolleau SAS and Icape Holding go up and down completely randomly.

Pair Corralation between Grolleau SAS and Icape Holding

Assuming the 90 days trading horizon Grolleau SAS is expected to under-perform the Icape Holding. In addition to that, Grolleau SAS is 1.02 times more volatile than Icape Holding. It trades about -0.02 of its total potential returns per unit of risk. Icape Holding is currently generating about -0.02 per unit of volatility. If you would invest  1,646  in Icape Holding on October 22, 2024 and sell it today you would lose (716.00) from holding Icape Holding or give up 43.5% of portfolio value over 90 days.

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

Grolleau SAS  vs.  Icape Holding

Grolleau SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grolleau SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grolleau SAS is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Icape Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icape Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Icape Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grolleau SAS and Icape Holding

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

The idea behind Grolleau SAS and Icape Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.