Correlation Between NRJ and Affluent Medical

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

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

Diversification Opportunities for NRJ and Affluent Medical

-0.19

Correlation Coefficient

NRJ  Affluent Medical

Good diversification

The 3 months correlation between NRJ and Affluent is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NRJ Group and Affluent Medical SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affluent Medical SAS and NRJ 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 NRJ Group are associated (or correlated) with Affluent Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affluent Medical SAS has no effect on the direction of NRJ i.e., NRJ and Affluent Medical go up and down completely randomly.

Pair Corralation between NRJ and Affluent Medical

Assuming the 90 days trading horizon NRJ Group is expected to under-perform the Affluent Medical. But the stock apears to be less risky and, when comparing its historical volatility, NRJ Group is 1.79 times less risky than Affluent Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Affluent Medical SAS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Affluent Medical SAS on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Affluent Medical SAS or generate 3.73% return on investment over 90 days.

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

NRJ Group  vs.  Affluent Medical SAS

NRJ Group

Risk-Adjusted Performance

Very Weak

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

Affluent Medical SAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affluent Medical SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Affluent Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NRJ and Affluent Medical

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

The idea behind NRJ Group and Affluent Medical 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.