Correlation Between Neolife SA and Passat Socit

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

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

Diversification Opportunities for Neolife SA and Passat Socit

0.0

Correlation Coefficient

Neolife SA  Passat Socit

Pay attention - limited upside

The 3 months correlation between Neolife and Passat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Neolife SA and Passat Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passat Socit Anonyme 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 Passat Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passat Socit Anonyme has no effect on the direction of Neolife SA i.e., Neolife SA and Passat Socit go up and down completely randomly.

Pair Corralation between Neolife SA and Passat Socit

Assuming the 90 days trading horizon Neolife SA is expected to generate 2.28 times more return on investment than Passat Socit. However, Neolife SA is 2.28 times more volatile than Passat Socit Anonyme. It trades about 0.02 of its potential returns per unit of risk. Passat Socit Anonyme is currently generating about 0.01 per unit of risk. If you would invest  7.30  in Neolife SA on October 21, 2024 and sell it today you would lose (0.77) from holding Neolife SA or give up 10.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Neolife SA  vs.  Passat Socit Anonyme

Neolife SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neolife SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neolife SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Passat Socit Anonyme

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Passat Socit Anonyme are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Passat Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neolife SA and Passat Socit

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

The idea behind Neolife SA and Passat Socit Anonyme 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.