Correlation Between Graines Voltz and GEA Grenobl

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

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

Diversification Opportunities for Graines Voltz and GEA Grenobl

-0.62

Correlation Coefficient

Graines Voltz  GEA Grenobl

Excellent diversification

The 3 months correlation between Graines and GEA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Graines Voltz SA and GEA Grenobl Elect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA Grenobl Elect and Graines Voltz 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 Graines Voltz SA are associated (or correlated) with GEA Grenobl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA Grenobl Elect has no effect on the direction of Graines Voltz i.e., Graines Voltz and GEA Grenobl go up and down completely randomly.

Pair Corralation between Graines Voltz and GEA Grenobl

Assuming the 90 days trading horizon Graines Voltz SA is expected to under-perform the GEA Grenobl. In addition to that, Graines Voltz is 1.36 times more volatile than GEA Grenobl Elect. It trades about -0.02 of its total potential returns per unit of risk. GEA Grenobl Elect is currently generating about 0.13 per unit of volatility. If you would invest  7,450  in GEA Grenobl Elect on December 29, 2024 and sell it today you would earn a total of  1,250  from holding GEA Grenobl Elect or generate 16.78% return on investment over 90 days.

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

Graines Voltz SA  vs.  GEA Grenobl Elect

Graines Voltz SA

Risk-Adjusted Performance

Very Weak

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

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 9 (%) 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.

Pair Trading with Graines Voltz and GEA Grenobl

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

The idea behind Graines Voltz SA and GEA Grenobl Elect 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..