Correlation Between Manitou BF and Neotion SA

Can any of the company-specific risk be diversified away by investing in both Manitou BF and Neotion 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 Manitou BF and Neotion SA 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 Neotion SA, you can compare the effects of market volatilities on Manitou BF and Neotion 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 Manitou BF with a short position of Neotion SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitou BF and Neotion SA.

Diversification Opportunities for Manitou BF and Neotion SA

-0.29

Correlation Coefficient

Manitou BF  Neotion SA

Very good diversification

The 3 months correlation between Manitou and Neotion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Neotion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neotion 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 Neotion SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neotion SA has no effect on the direction of Manitou BF i.e., Manitou BF and Neotion SA go up and down completely randomly.

Pair Corralation between Manitou BF and Neotion SA

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Neotion SA. But the stock apears to be less risky and, when comparing its historical volatility, Manitou BF SA is 2.23 times less risky than Neotion SA. The stock trades about -0.09 of its potential returns per unit of risk. The Neotion SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Neotion SA on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Neotion SA or generate 4.17% return on investment over 90 days.

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

Manitou BF SA  vs.  Neotion SA

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manitou BF SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Neotion SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neotion SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neotion SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Manitou BF and Neotion SA

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

The idea behind Manitou BF SA and Neotion 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..