Correlation Between Energisme and ACTEOS SA

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

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

Diversification Opportunities for Energisme and ACTEOS SA

0.41

Correlation Coefficient

Energisme  ACTEOS SA

Very weak diversification

The 3 months correlation between Energisme and ACTEOS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Energisme and ACTEOS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACTEOS SA 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 ACTEOS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACTEOS SA has no effect on the direction of Energisme i.e., Energisme and ACTEOS SA go up and down completely randomly.

Pair Corralation between Energisme and ACTEOS SA

Assuming the 90 days trading horizon Energisme is expected to generate 0.96 times more return on investment than ACTEOS SA. However, Energisme is 1.04 times less risky than ACTEOS SA. It trades about -0.03 of its potential returns per unit of risk. ACTEOS SA is currently generating about -0.24 per unit of risk. If you would invest  0.57  in Energisme on September 27, 2024 and sell it today you would lose (0.02) from holding Energisme or give up 3.51% of portfolio value over 90 days.

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

Energisme  vs.  ACTEOS SA

Energisme

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisme are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Energisme may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ACTEOS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACTEOS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Energisme and ACTEOS SA

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

The idea behind Energisme and ACTEOS 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 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.