Correlation Between Eramet SA and TaTaTu SpA

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

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

Diversification Opportunities for Eramet SA and TaTaTu SpA

0.0

Correlation Coefficient

Eramet SA  TaTaTu SpA

Pay attention - limited upside

The 3 months correlation between Eramet and TaTaTu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA and TaTaTu SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TaTaTu SpA and Eramet 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 Eramet SA are associated (or correlated) with TaTaTu SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TaTaTu SpA has no effect on the direction of Eramet SA i.e., Eramet SA and TaTaTu SpA go up and down completely randomly.

Pair Corralation between Eramet SA and TaTaTu SpA

If you would invest  5,330  in Eramet SA on December 30, 2024 and sell it today you would lose (120.00) from holding Eramet SA or give up 2.25% of portfolio value over 90 days.

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

Eramet SA  vs.  TaTaTu SpA

Eramet SA

Risk-Adjusted Performance

Very Weak

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

TaTaTu SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days TaTaTu SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TaTaTu SpA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eramet SA and TaTaTu SpA

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

The idea behind Eramet SA and TaTaTu SpA 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 Valuation module to check real value of public entities based on technical and fundamental data.