Correlation Between Vinci SA and Thales SA

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

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

Diversification Opportunities for Vinci SA and Thales SA

-0.03

Correlation Coefficient

Vinci SA  Thales SA

Good diversification

The 3 months correlation between Vinci and Thales is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Vinci SA i.e., Vinci SA and Thales SA go up and down completely randomly.

Pair Corralation between Vinci SA and Thales SA

Assuming the 90 days horizon Vinci SA is expected to under-perform the Thales SA. But the stock apears to be less risky and, when comparing its historical volatility, Vinci SA is 1.2 times less risky than Thales SA. The stock trades about -0.06 of its potential returns per unit of risk. The Thales SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  14,552  in Thales SA on September 12, 2024 and sell it today you would lose (802.00) from holding Thales SA or give up 5.51% of portfolio value over 90 days.

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

Vinci SA  vs.  Thales 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 somewhat strong basic indicators, Vinci SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thales SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vinci SA and Thales SA

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

The idea behind Vinci SA and Thales 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.