Correlation Between Euronext and Oeneo SA

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

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

Diversification Opportunities for Euronext and Oeneo SA

-0.8

Correlation Coefficient

Euronext  Oeneo SA

Pay attention - limited upside

The 3 months correlation between Euronext and Oeneo is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Oeneo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oeneo SA and Euronext 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 Euronext NV are associated (or correlated) with Oeneo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oeneo SA has no effect on the direction of Euronext i.e., Euronext and Oeneo SA go up and down completely randomly.

Pair Corralation between Euronext and Oeneo SA

Assuming the 90 days trading horizon Euronext NV is expected to generate 0.91 times more return on investment than Oeneo SA. However, Euronext NV is 1.1 times less risky than Oeneo SA. It trades about 0.08 of its potential returns per unit of risk. Oeneo SA is currently generating about -0.04 per unit of risk. If you would invest  6,632  in Euronext NV on September 24, 2024 and sell it today you would earn a total of  4,088  from holding Euronext NV or generate 61.64% return on investment over 90 days.

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

Euronext NV  vs.  Oeneo SA

Euronext NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Euronext may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oeneo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oeneo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Oeneo 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 Euronext and Oeneo SA

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

The idea behind Euronext NV and Oeneo 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.