Correlation Between Assystem and IDI SCA

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

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

Diversification Opportunities for Assystem and IDI SCA

0.42

Correlation Coefficient

Assystem  IDI SCA

Very weak diversification

The 3 months correlation between Assystem and IDI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Assystem SA and IDI SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI SCA and Assystem 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 Assystem SA are associated (or correlated) with IDI SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI SCA has no effect on the direction of Assystem i.e., Assystem and IDI SCA go up and down completely randomly.

Pair Corralation between Assystem and IDI SCA

Assuming the 90 days trading horizon Assystem SA is expected to under-perform the IDI SCA. In addition to that, Assystem is 3.37 times more volatile than IDI SCA. It trades about -0.15 of its total potential returns per unit of risk. IDI SCA is currently generating about -0.05 per unit of volatility. If you would invest  7,060  in IDI SCA on August 31, 2024 and sell it today you would lose (200.00) from holding IDI SCA or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Assystem SA  vs.  IDI SCA

Assystem SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assystem 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

IDI SCA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Assystem and IDI SCA

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

The idea behind Assystem SA and IDI SCA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.