Correlation Between Aramis SAS and Neoen SA

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

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

Diversification Opportunities for Aramis SAS and Neoen SA

0.57

Correlation Coefficient

Aramis SAS  Neoen SA

Very weak diversification

The 3 months correlation between Aramis and Neoen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aramis SAS and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and Aramis SAS 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 Aramis SAS are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of Aramis SAS i.e., Aramis SAS and Neoen SA go up and down completely randomly.

Pair Corralation between Aramis SAS and Neoen SA

Assuming the 90 days trading horizon Aramis SAS is expected to generate 7.22 times more return on investment than Neoen SA. However, Aramis SAS is 7.22 times more volatile than Neoen SA. It trades about 0.22 of its potential returns per unit of risk. Neoen SA is currently generating about 0.21 per unit of risk. If you would invest  429.00  in Aramis SAS on September 15, 2024 and sell it today you would earn a total of  386.00  from holding Aramis SAS or generate 89.98% return on investment over 90 days.

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

Aramis SAS  vs.  Neoen SA

Aramis SAS

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aramis SAS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Aramis SAS reported solid returns over the last few months and may actually be approaching a breakup point.

Neoen SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Neoen SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aramis SAS and Neoen SA

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

The idea behind Aramis SAS and Neoen 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.