Correlation Between Neolife SA and Rubis SCA

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

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

Diversification Opportunities for Neolife SA and Rubis SCA

-0.47

Correlation Coefficient

Neolife SA  Rubis SCA

Very good diversification

The 3 months correlation between Neolife and Rubis is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Neolife SA and Rubis SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubis SCA 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 Rubis SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubis SCA has no effect on the direction of Neolife SA i.e., Neolife SA and Rubis SCA go up and down completely randomly.

Pair Corralation between Neolife SA and Rubis SCA

Assuming the 90 days trading horizon Neolife SA is expected to generate 1.58 times more return on investment than Rubis SCA. However, Neolife SA is 1.58 times more volatile than Rubis SCA. It trades about 0.24 of its potential returns per unit of risk. Rubis SCA is currently generating about 0.02 per unit of risk. If you would invest  5.62  in Neolife SA on September 25, 2024 and sell it today you would earn a total of  0.58  from holding Neolife SA or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Neolife SA  vs.  Rubis SCA

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.

Rubis SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubis SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Rubis SCA 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 Rubis SCA

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

The idea behind Neolife SA and Rubis SCA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.