Correlation Between Manitou BF and Europlasma

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

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

Diversification Opportunities for Manitou BF and Europlasma

-0.85

Correlation Coefficient

Manitou BF  Europlasma

Pay attention - limited upside

The 3 months correlation between Manitou and Europlasma is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Europlasma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europlasma SA and Manitou BF 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 Manitou BF SA are associated (or correlated) with Europlasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europlasma SA has no effect on the direction of Manitou BF i.e., Manitou BF and Europlasma go up and down completely randomly.

Pair Corralation between Manitou BF and Europlasma

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 0.22 times more return on investment than Europlasma. However, Manitou BF SA is 4.49 times less risky than Europlasma. It trades about 0.29 of its potential returns per unit of risk. Europlasma SA is currently generating about -0.31 per unit of risk. If you would invest  1,540  in Manitou BF SA on December 1, 2024 and sell it today you would earn a total of  730.00  from holding Manitou BF SA or generate 47.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Manitou BF SA  vs.  Europlasma SA

Manitou BF SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF sustained solid returns over the last few months and may actually be approaching a breakup point.

Europlasma SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europlasma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Manitou BF and Europlasma

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

The idea behind Manitou BF SA and Europlasma 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.