Correlation Between Eramet SA and Guandao Puer

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

By analyzing existing cross correlation between Eramet SA and Guandao Puer Investment, you can compare the effects of market volatilities on Eramet SA and Guandao Puer 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 Guandao Puer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eramet SA and Guandao Puer.

Diversification Opportunities for Eramet SA and Guandao Puer

0.0

Correlation Coefficient

Eramet SA  Guandao Puer

Pay attention - limited upside

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

Pair Corralation between Eramet SA and Guandao Puer

If you would invest  45.00  in Guandao Puer Investment on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Guandao Puer Investment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Eramet SA  vs.  Guandao Puer Investment

Eramet SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eramet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guandao Puer Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guandao Puer Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Guandao Puer 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 Guandao Puer

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

The idea behind Eramet SA and Guandao Puer Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.