Correlation Between Kerlink SAS and Vergnet

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

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

Diversification Opportunities for Kerlink SAS and Vergnet

-0.28

Correlation Coefficient

Kerlink SAS  Vergnet

Very good diversification

The 3 months correlation between Kerlink and Vergnet is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kerlink SAS and Vergnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vergnet and Kerlink 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 Kerlink SAS are associated (or correlated) with Vergnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vergnet has no effect on the direction of Kerlink SAS i.e., Kerlink SAS and Vergnet go up and down completely randomly.

Pair Corralation between Kerlink SAS and Vergnet

Assuming the 90 days trading horizon Kerlink SAS is expected to generate 0.25 times more return on investment than Vergnet. However, Kerlink SAS is 3.97 times less risky than Vergnet. It trades about -0.02 of its potential returns per unit of risk. Vergnet is currently generating about -0.1 per unit of risk. If you would invest  199.00  in Kerlink SAS on September 29, 2024 and sell it today you would lose (149.00) from holding Kerlink SAS or give up 74.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Kerlink SAS  vs.  Vergnet

Kerlink SAS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kerlink SAS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kerlink SAS is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vergnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vergnet 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kerlink SAS and Vergnet

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

The idea behind Kerlink SAS and Vergnet 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.