Correlation Between Chargeurs and SPIE SA

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

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

Diversification Opportunities for Chargeurs and SPIE SA

0.81

Correlation Coefficient

Chargeurs  SPIE SA

Very poor diversification

The 3 months correlation between Chargeurs and SPIE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chargeurs SA and SPIE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPIE SA and Chargeurs 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 Chargeurs SA are associated (or correlated) with SPIE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPIE SA has no effect on the direction of Chargeurs i.e., Chargeurs and SPIE SA go up and down completely randomly.

Pair Corralation between Chargeurs and SPIE SA

Assuming the 90 days trading horizon Chargeurs is expected to generate 1.71 times less return on investment than SPIE SA. But when comparing it to its historical volatility, Chargeurs SA is 1.14 times less risky than SPIE SA. It trades about 0.14 of its potential returns per unit of risk. SPIE SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,958  in SPIE SA on December 30, 2024 and sell it today you would earn a total of  1,012  from holding SPIE SA or generate 34.21% return on investment over 90 days.

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

Chargeurs SA  vs.  SPIE SA

Chargeurs SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chargeurs SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Chargeurs sustained solid returns over the last few months and may actually be approaching a breakup point.

SPIE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPIE SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SPIE SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chargeurs and SPIE SA

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

The idea behind Chargeurs SA and SPIE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.