Correlation Between Eramet SA and SPIE SA

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

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

Diversification Opportunities for Eramet SA and SPIE SA

0.41

Correlation Coefficient

Eramet SA  SPIE SA

Very weak diversification

The 3 months correlation between Eramet and SPIE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA and SPIE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPIE SA 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 SPIE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPIE SA has no effect on the direction of Eramet SA i.e., Eramet SA and SPIE SA go up and down completely randomly.

Pair Corralation between Eramet SA and SPIE SA

Assuming the 90 days trading horizon Eramet SA is expected to under-perform the SPIE SA. In addition to that, Eramet SA is 2.97 times more volatile than SPIE SA. It trades about -0.05 of its total potential returns per unit of risk. SPIE SA is currently generating about 0.32 per unit of volatility. If you would invest  3,220  in SPIE SA on December 2, 2024 and sell it today you would earn a total of  208.00  from holding SPIE SA or generate 6.46% return on investment over 90 days.

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

Eramet SA  vs.  SPIE SA

Eramet SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eramet SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eramet SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SPIE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPIE SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SPIE SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eramet SA and SPIE SA

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

The idea behind Eramet SA and SPIE 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.