Correlation Between Vinci SA and Europlasma

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

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

Diversification Opportunities for Vinci SA and Europlasma

0.78

Correlation Coefficient

Vinci SA  Europlasma

Poor diversification

The 3 months correlation between Vinci and Europlasma is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA and Europlasma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europlasma SA and Vinci SA 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 Vinci SA are associated (or correlated) with Europlasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europlasma SA has no effect on the direction of Vinci SA i.e., Vinci SA and Europlasma go up and down completely randomly.

Pair Corralation between Vinci SA and Europlasma

Assuming the 90 days horizon Vinci SA is expected to generate 0.05 times more return on investment than Europlasma. However, Vinci SA is 21.85 times less risky than Europlasma. It trades about 0.02 of its potential returns per unit of risk. Europlasma SA is currently generating about -0.01 per unit of risk. If you would invest  9,228  in Vinci SA on August 31, 2024 and sell it today you would earn a total of  684.00  from holding Vinci SA or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Vinci SA  vs.  Europlasma SA

Vinci SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Europlasma SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Europlasma SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Europlasma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vinci SA and Europlasma

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

The idea behind Vinci SA and Europlasma 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.