Correlation Between Methanor and Robertet

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

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

Diversification Opportunities for Methanor and Robertet

-0.45

Correlation Coefficient

Methanor  Robertet

Very good diversification

The 3 months correlation between Methanor and Robertet is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Methanor and Robertet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robertet SA and Methanor 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 Methanor are associated (or correlated) with Robertet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robertet SA has no effect on the direction of Methanor i.e., Methanor and Robertet go up and down completely randomly.

Pair Corralation between Methanor and Robertet

Assuming the 90 days trading horizon Methanor is expected to generate 6.25 times more return on investment than Robertet. However, Methanor is 6.25 times more volatile than Robertet SA. It trades about 0.17 of its potential returns per unit of risk. Robertet SA is currently generating about -0.13 per unit of risk. If you would invest  172.00  in Methanor on December 4, 2024 and sell it today you would earn a total of  113.00  from holding Methanor or generate 65.7% return on investment over 90 days.

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

Methanor  vs.  Robertet SA

Methanor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Methanor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Methanor reported solid returns over the last few months and may actually be approaching a breakup point.

Robertet SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Robertet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Methanor and Robertet

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

The idea behind Methanor and Robertet 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.