Correlation Between Neoen SA and Aramis SAS

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

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

Diversification Opportunities for Neoen SA and Aramis SAS

0.57

Correlation Coefficient

Neoen SA  Aramis SAS

Very weak diversification

The 3 months correlation between Neoen and Aramis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and Aramis SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramis SAS and Neoen SA 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 Neoen SA are associated (or correlated) with Aramis SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramis SAS has no effect on the direction of Neoen SA i.e., Neoen SA and Aramis SAS go up and down completely randomly.

Pair Corralation between Neoen SA and Aramis SAS

Assuming the 90 days trading horizon Neoen SA is expected to generate 21.1 times less return on investment than Aramis SAS. But when comparing it to its historical volatility, Neoen SA is 10.21 times less risky than Aramis SAS. It trades about 0.13 of its potential returns per unit of risk. Aramis SAS is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  571.00  in Aramis SAS on September 15, 2024 and sell it today you would earn a total of  244.00  from holding Aramis SAS or generate 42.73% return on investment over 90 days.

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

Neoen SA  vs.  Aramis SAS

Neoen SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Neoen SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aramis SAS

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aramis SAS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Aramis SAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neoen SA and Aramis SAS

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

The idea behind Neoen SA and Aramis SAS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.