Correlation Between GEA Grenobl and IDI SCA

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

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

Diversification Opportunities for GEA Grenobl and IDI SCA

0.72

Correlation Coefficient

GEA Grenobl  IDI SCA

Poor diversification

The 3 months correlation between GEA and IDI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GEA Grenobl Elect and IDI SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI SCA and GEA Grenobl 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 GEA Grenobl Elect are associated (or correlated) with IDI SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI SCA has no effect on the direction of GEA Grenobl i.e., GEA Grenobl and IDI SCA go up and down completely randomly.

Pair Corralation between GEA Grenobl and IDI SCA

Assuming the 90 days trading horizon GEA Grenobl Elect is expected to generate 2.43 times more return on investment than IDI SCA. However, GEA Grenobl is 2.43 times more volatile than IDI SCA. It trades about 0.13 of its potential returns per unit of risk. IDI SCA is currently generating about 0.16 per unit of risk. If you would invest  7,450  in GEA Grenobl Elect on December 28, 2024 and sell it today you would earn a total of  1,300  from holding GEA Grenobl Elect or generate 17.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

GEA Grenobl Elect  vs.  IDI SCA

GEA Grenobl Elect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEA Grenobl Elect are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GEA Grenobl sustained solid returns over the last few months and may actually be approaching a breakup point.

IDI SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IDI SCA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IDI SCA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GEA Grenobl and IDI SCA

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

The idea behind GEA Grenobl Elect and IDI SCA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.