Correlation Between Imerys SA and Rubis SCA

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

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

Diversification Opportunities for Imerys SA and Rubis SCA

-0.2

Correlation Coefficient

Imerys SA  Rubis SCA

Good diversification

The 3 months correlation between Imerys and Rubis is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Imerys SA and Rubis SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubis SCA and Imerys 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 Imerys SA are associated (or correlated) with Rubis SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubis SCA has no effect on the direction of Imerys SA i.e., Imerys SA and Rubis SCA go up and down completely randomly.

Pair Corralation between Imerys SA and Rubis SCA

Assuming the 90 days horizon Imerys SA is expected to generate 0.79 times more return on investment than Rubis SCA. However, Imerys SA is 1.27 times less risky than Rubis SCA. It trades about -0.04 of its potential returns per unit of risk. Rubis SCA is currently generating about -0.12 per unit of risk. If you would invest  3,038  in Imerys SA on August 31, 2024 and sell it today you would lose (168.00) from holding Imerys SA or give up 5.53% of portfolio value over 90 days.

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

Imerys SA  vs.  Rubis SCA

Imerys SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imerys SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Imerys SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rubis SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubis SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Imerys SA and Rubis SCA

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

The idea behind Imerys SA and Rubis SCA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.