Correlation Between Etablissements Maurel and Vallourec

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

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

Diversification Opportunities for Etablissements Maurel and Vallourec

0.1

Correlation Coefficient

Etablissements Maurel  Vallourec

Average diversification

The 3 months correlation between Etablissements and Vallourec is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Etablissements Maurel et and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec and Etablissements Maurel 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 Etablissements Maurel et 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 Etablissements Maurel i.e., Etablissements Maurel and Vallourec go up and down completely randomly.

Pair Corralation between Etablissements Maurel and Vallourec

Assuming the 90 days trading horizon Etablissements Maurel et is expected to generate 1.33 times more return on investment than Vallourec. However, Etablissements Maurel is 1.33 times more volatile than Vallourec. It trades about 0.01 of its potential returns per unit of risk. Vallourec is currently generating about -0.05 per unit of risk. If you would invest  512.00  in Etablissements Maurel et on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Etablissements Maurel et or generate 0.2% return on investment over 90 days.

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

Etablissements Maurel et  vs.  Vallourec

Etablissements Maurel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Etablissements Maurel et are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Etablissements Maurel is not utilizing all of its potentials. The current 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 Etablissements Maurel and Vallourec

The main advantage of trading using opposite Etablissements Maurel and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etablissements Maurel 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 Etablissements Maurel et 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.