Correlation Between Elior SCA and Vetoquinol

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

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

Diversification Opportunities for Elior SCA and Vetoquinol

0.51

Correlation Coefficient

Elior SCA  Vetoquinol

Very weak diversification

The 3 months correlation between Elior and Vetoquinol is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Elior SCA and Vetoquinol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vetoquinol and Elior SCA 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 Elior SCA are associated (or correlated) with Vetoquinol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vetoquinol has no effect on the direction of Elior SCA i.e., Elior SCA and Vetoquinol go up and down completely randomly.

Pair Corralation between Elior SCA and Vetoquinol

Assuming the 90 days trading horizon Elior SCA is expected to under-perform the Vetoquinol. In addition to that, Elior SCA is 5.53 times more volatile than Vetoquinol. It trades about -0.26 of its total potential returns per unit of risk. Vetoquinol is currently generating about -0.21 per unit of volatility. If you would invest  8,210  in Vetoquinol on September 16, 2024 and sell it today you would lose (430.00) from holding Vetoquinol or give up 5.24% of portfolio value over 90 days.

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

Elior SCA  vs.  Vetoquinol

Elior SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elior SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vetoquinol

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elior SCA and Vetoquinol

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

The idea behind Elior SCA and Vetoquinol 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.