Correlation Between Dassault Systemes and Exail Technologies

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

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

Diversification Opportunities for Dassault Systemes and Exail Technologies

0.57

Correlation Coefficient

Dassault Systemes  Exail Technologies

Very weak diversification

The 3 months correlation between Dassault and Exail is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Exail Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exail Technologies and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Exail Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exail Technologies has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Exail Technologies go up and down completely randomly.

Pair Corralation between Dassault Systemes and Exail Technologies

Assuming the 90 days trading horizon Dassault Systemes is expected to generate 7.55 times less return on investment than Exail Technologies. But when comparing it to its historical volatility, Dassault Systemes SE is 2.02 times less risky than Exail Technologies. It trades about 0.1 of its potential returns per unit of risk. Exail Technologies SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,732  in Exail Technologies SA on December 27, 2024 and sell it today you would earn a total of  2,253  from holding Exail Technologies SA or generate 130.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dassault Systemes SE  vs.  Exail Technologies SA

Dassault Systemes

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systemes SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dassault Systemes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Exail Technologies

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exail Technologies SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Exail Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dassault Systemes and Exail Technologies

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

The idea behind Dassault Systemes SE and Exail Technologies 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 Stocks Directory module to find actively traded stocks across global markets.