Correlation Between Malteries Franco and Poxel SA

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

By analyzing existing cross correlation between Malteries Franco Belges Socit and Poxel SA, you can compare the effects of market volatilities on Malteries Franco and Poxel 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 Malteries Franco with a short position of Poxel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malteries Franco and Poxel SA.

Diversification Opportunities for Malteries Franco and Poxel SA

0.66

Correlation Coefficient

Malteries Franco  Poxel SA

Poor diversification

The 3 months correlation between Malteries and Poxel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Malteries Franco Belges Socit and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA and Malteries Franco 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 Malteries Franco Belges Socit are associated (or correlated) with Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Malteries Franco i.e., Malteries Franco and Poxel SA go up and down completely randomly.

Pair Corralation between Malteries Franco and Poxel SA

Assuming the 90 days trading horizon Malteries Franco is expected to generate 1.31 times less return on investment than Poxel SA. But when comparing it to its historical volatility, Malteries Franco Belges Socit is 5.36 times less risky than Poxel SA. It trades about 0.12 of its potential returns per unit of risk. Poxel SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Poxel SA on December 4, 2024 and sell it today you would lose (3.00) from holding Poxel SA or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.08%
Values	Daily Returns

Malteries Franco Belges Socit  vs.  Poxel SA

Malteries Franco Belges

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malteries Franco Belges Socit are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malteries Franco sustained solid returns over the last few months and may actually be approaching a breakup point.

Poxel SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Poxel SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Poxel SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malteries Franco and Poxel SA

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

The idea behind Malteries Franco Belges Socit and Poxel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.