Correlation Between Aramis SAS and Voltalia

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

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

Diversification Opportunities for Aramis SAS and Voltalia

-0.63

Correlation Coefficient

Aramis SAS  Voltalia

Excellent diversification

The 3 months correlation between Aramis and Voltalia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aramis SAS and Voltalia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltalia 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 Voltalia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltalia SA has no effect on the direction of Aramis SAS i.e., Aramis SAS and Voltalia go up and down completely randomly.

Pair Corralation between Aramis SAS and Voltalia

Assuming the 90 days trading horizon Aramis SAS is expected to generate 0.71 times more return on investment than Voltalia. However, Aramis SAS is 1.41 times less risky than Voltalia. It trades about 0.28 of its potential returns per unit of risk. Voltalia SA is currently generating about -0.02 per unit of risk. If you would invest  571.00  in Aramis SAS on September 16, 2024 and sell it today you would earn a total of  244.00  from holding Aramis SAS or generate 42.73% return on investment over 90 days.

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

Aramis SAS  vs.  Voltalia 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.

Voltalia SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aramis SAS and Voltalia

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

The idea behind Aramis SAS and Voltalia 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.