Correlation Between Neolife SA and Gaussin

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

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

Diversification Opportunities for Neolife SA and Gaussin

0.34

Correlation Coefficient

Neolife SA  Gaussin

Weak diversification

The 3 months correlation between Neolife and Gaussin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Neolife SA and Gaussin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaussin and Neolife SA 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 Neolife SA are associated (or correlated) with Gaussin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaussin has no effect on the direction of Neolife SA i.e., Neolife SA and Gaussin go up and down completely randomly.

Pair Corralation between Neolife SA and Gaussin

Assuming the 90 days trading horizon Neolife SA is expected to generate 0.49 times more return on investment than Gaussin. However, Neolife SA is 2.05 times less risky than Gaussin. It trades about 0.02 of its potential returns per unit of risk. Gaussin is currently generating about -0.02 per unit of risk. If you would invest  6.90  in Neolife SA on September 24, 2024 and sell it today you would lose (0.70) from holding Neolife SA or give up 10.14% of portfolio value over 90 days.

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

Neolife SA  vs.  Gaussin

Neolife SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gaussin

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaussin are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gaussin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neolife SA and Gaussin

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

The idea behind Neolife SA and Gaussin 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.