Correlation Between Figeac Aero and Prodways Group

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

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

Diversification Opportunities for Figeac Aero and Prodways Group

0.79

Correlation Coefficient

Figeac Aero  Prodways Group

Poor diversification

The 3 months correlation between Figeac and Prodways is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Figeac Aero SA and Prodways Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodways Group SA and Figeac Aero 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 Figeac Aero SA are associated (or correlated) with Prodways Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodways Group SA has no effect on the direction of Figeac Aero i.e., Figeac Aero and Prodways Group go up and down completely randomly.

Pair Corralation between Figeac Aero and Prodways Group

Assuming the 90 days trading horizon Figeac Aero SA is expected to generate 0.83 times more return on investment than Prodways Group. However, Figeac Aero SA is 1.21 times less risky than Prodways Group. It trades about 0.26 of its potential returns per unit of risk. Prodways Group SA is currently generating about 0.07 per unit of risk. If you would invest  598.00  in Figeac Aero SA on December 30, 2024 and sell it today you would earn a total of  308.00  from holding Figeac Aero SA or generate 51.51% return on investment over 90 days.

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

Figeac Aero SA  vs.  Prodways Group SA

Figeac Aero SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Figeac Aero SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Figeac Aero sustained solid returns over the last few months and may actually be approaching a breakup point.

Prodways Group SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prodways Group SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Prodways Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Figeac Aero and Prodways Group

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

The idea behind Figeac Aero SA and Prodways Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.