Correlation Between Getlink SE and Vallourec

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

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

Diversification Opportunities for Getlink SE and Vallourec

-0.76

Correlation Coefficient

Getlink SE  Vallourec

Pay attention - limited upside

The 3 months correlation between Getlink and Vallourec is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec and Getlink SE 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 Getlink SE are associated (or correlated) with Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Getlink SE i.e., Getlink SE and Vallourec go up and down completely randomly.

Pair Corralation between Getlink SE and Vallourec

Assuming the 90 days trading horizon Getlink SE is expected to under-perform the Vallourec. But the stock apears to be less risky and, when comparing its historical volatility, Getlink SE is 2.59 times less risky than Vallourec. The stock trades about -0.06 of its potential returns per unit of risk. The Vallourec is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,489  in Vallourec on September 5, 2024 and sell it today you would earn a total of  163.00  from holding Vallourec or generate 10.95% return on investment over 90 days.

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

Getlink SE  vs.  Vallourec

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vallourec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vallourec are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vallourec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Getlink SE and Vallourec

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

The idea behind Getlink SE and Vallourec 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.