Correlation Between TaTaTu SpA and Eramet SA

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

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

Diversification Opportunities for TaTaTu SpA and Eramet SA

0.0

Correlation Coefficient

TaTaTu SpA  Eramet SA

Pay attention - limited upside

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

Pair Corralation between TaTaTu SpA and Eramet SA

If you would invest  5,330  in Eramet SA on December 30, 2024 and sell it today you would lose (120.00) from holding Eramet SA or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TaTaTu SpA  vs.  Eramet SA

TaTaTu SpA

Risk-Adjusted Performance

Very Weak

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

Eramet SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eramet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eramet SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TaTaTu SpA and Eramet SA

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

The idea behind TaTaTu SpA and Eramet 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.