Correlation Between Engie SA and Lectricite

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

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

Diversification Opportunities for Engie SA and Lectricite

-0.78

Correlation Coefficient

Engie SA  Lectricite

Pay attention - limited upside

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

Pair Corralation between Engie SA and Lectricite

Assuming the 90 days trading horizon Engie SA is expected to under-perform the Lectricite. But the stock apears to be less risky and, when comparing its historical volatility, Engie SA is 1.04 times less risky than Lectricite. The stock trades about -0.1 of its potential returns per unit of risk. The lectricite de Strasbourg is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,650  in lectricite de Strasbourg on September 4, 2024 and sell it today you would earn a total of  400.00  from holding lectricite de Strasbourg or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Engie SA  vs.  lectricite de Strasbourg

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

lectricite de Strasbourg

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in lectricite de Strasbourg are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lectricite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Engie SA and Lectricite

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

The idea behind Engie SA and lectricite de Strasbourg 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 Commodity Directory module to find actively traded commodities issued by global exchanges.