Correlation Between Energisme and Gaussin

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

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

Diversification Opportunities for Energisme and Gaussin

0.2

Correlation Coefficient

Energisme  Gaussin

Modest diversification

The 3 months correlation between Energisme and Gaussin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Energisme and Gaussin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaussin and Energisme 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 Energisme 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 Energisme i.e., Energisme and Gaussin go up and down completely randomly.

Pair Corralation between Energisme and Gaussin

Assuming the 90 days trading horizon Energisme is expected to under-perform the Gaussin. But the stock apears to be less risky and, when comparing its historical volatility, Energisme is 5.24 times less risky than Gaussin. The stock trades about -0.01 of its potential returns per unit of risk. The Gaussin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Gaussin on September 30, 2024 and sell it today you would lose (9.00) from holding Gaussin or give up 45.0% of portfolio value over 90 days.

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

Energisme  vs.  Gaussin

Energisme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Energisme is not utilizing all of its potentials. The latest 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 Energisme and Gaussin

The main advantage of trading using opposite Energisme and Gaussin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisme 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 Energisme 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.