Correlation Between Hydrogene and Nacon Sa

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

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

Diversification Opportunities for Hydrogene and Nacon Sa

0.32

Correlation Coefficient

Hydrogene  Nacon Sa

Weak diversification

The 3 months correlation between Hydrogene and Nacon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogene De France and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon Sa and Hydrogene 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 Hydrogene De France are associated (or correlated) with Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of Hydrogene i.e., Hydrogene and Nacon Sa go up and down completely randomly.

Pair Corralation between Hydrogene and Nacon Sa

Assuming the 90 days trading horizon Hydrogene De France is expected to under-perform the Nacon Sa. But the stock apears to be less risky and, when comparing its historical volatility, Hydrogene De France is 1.25 times less risky than Nacon Sa. The stock trades about -0.11 of its potential returns per unit of risk. The Nacon Sa is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Nacon Sa on October 22, 2024 and sell it today you would lose (166.00) from holding Nacon Sa or give up 70.94% of portfolio value over 90 days.

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

Hydrogene De France  vs.  Nacon Sa

Hydrogene De France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrogene De France has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nacon Sa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nacon Sa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nacon Sa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hydrogene and Nacon Sa

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

The idea behind Hydrogene De France and Nacon 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..