Correlation Between Derichebourg and Seche Environnem

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

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

Diversification Opportunities for Derichebourg and Seche Environnem

0.24

Correlation Coefficient

Derichebourg  Seche Environnem

Modest diversification

The 3 months correlation between Derichebourg and Seche is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Seche Environnem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnem and Derichebourg 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 Derichebourg are associated (or correlated) with Seche Environnem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnem has no effect on the direction of Derichebourg i.e., Derichebourg and Seche Environnem go up and down completely randomly.

Pair Corralation between Derichebourg and Seche Environnem

Assuming the 90 days trading horizon Derichebourg is expected to generate 1.32 times more return on investment than Seche Environnem. However, Derichebourg is 1.32 times more volatile than Seche Environnem. It trades about 0.13 of its potential returns per unit of risk. Seche Environnem is currently generating about 0.16 per unit of risk. If you would invest  524.00  in Derichebourg on November 29, 2024 and sell it today you would earn a total of  31.00  from holding Derichebourg or generate 5.92% return on investment over 90 days.

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

Derichebourg  vs.  Seche Environnem

Derichebourg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Derichebourg sustained solid returns over the last few months and may actually be approaching a breakup point.

Seche Environnem

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnem are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seche Environnem may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Derichebourg and Seche Environnem

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

The idea behind Derichebourg and Seche Environnem 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.