Correlation Between Vergnet and Dolfines SAS

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

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

Diversification Opportunities for Vergnet and Dolfines SAS

0.69

Correlation Coefficient

Vergnet  Dolfines SAS

Poor diversification

The 3 months correlation between Vergnet and Dolfines is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vergnet and Dolfines SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolfines SAS and Vergnet 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 Vergnet are associated (or correlated) with Dolfines SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolfines SAS has no effect on the direction of Vergnet i.e., Vergnet and Dolfines SAS go up and down completely randomly.

Pair Corralation between Vergnet and Dolfines SAS

Assuming the 90 days trading horizon Vergnet is expected to under-perform the Dolfines SAS. But the stock apears to be less risky and, when comparing its historical volatility, Vergnet is 3.98 times less risky than Dolfines SAS. The stock trades about -0.11 of its potential returns per unit of risk. The Dolfines SAS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Dolfines SAS on September 15, 2024 and sell it today you would lose (32.00) from holding Dolfines SAS or give up 16.0% of portfolio value over 90 days.

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

Vergnet  vs.  Dolfines SAS

Vergnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vergnet has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Dolfines SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolfines SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vergnet and Dolfines SAS

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

The idea behind Vergnet and Dolfines SAS 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.