Correlation Between Neoen SA and Hydrogene

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

By analyzing existing cross correlation between Neoen SA and Hydrogene De France, you can compare the effects of market volatilities on Neoen SA and Hydrogene 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 Hydrogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neoen SA and Hydrogene.

Diversification Opportunities for Neoen SA and Hydrogene

0.66

Correlation Coefficient

Neoen SA  Hydrogene

Poor diversification

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

Pair Corralation between Neoen SA and Hydrogene

Assuming the 90 days trading horizon Neoen SA is expected to generate 67.43 times less return on investment than Hydrogene. But when comparing it to its historical volatility, Neoen SA is 40.37 times less risky than Hydrogene. It trades about 0.14 of its potential returns per unit of risk. Hydrogene De France is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  322.00  in Hydrogene De France on December 2, 2024 and sell it today you would earn a total of  348.00  from holding Hydrogene De France or generate 108.07% return on investment over 90 days.

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

Neoen SA  vs.  Hydrogene De France

Neoen SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 11 (%) 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.

Hydrogene De France

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hydrogene De France are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Hydrogene sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neoen SA and Hydrogene

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

The idea behind Neoen SA and Hydrogene De France 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.