Correlation Between OVH Groupe and Passat Socit

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

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

Diversification Opportunities for OVH Groupe and Passat Socit

-0.14

Correlation Coefficient

OVH Groupe  Passat Socit

Good diversification

The 3 months correlation between OVH and Passat is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding OVH Groupe SAS and Passat Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passat Socit Anonyme and OVH Groupe 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 OVH Groupe SAS are associated (or correlated) with Passat Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passat Socit Anonyme has no effect on the direction of OVH Groupe i.e., OVH Groupe and Passat Socit go up and down completely randomly.

Pair Corralation between OVH Groupe and Passat Socit

Assuming the 90 days trading horizon OVH Groupe SAS is expected to generate 0.6 times more return on investment than Passat Socit. However, OVH Groupe SAS is 1.67 times less risky than Passat Socit. It trades about 0.0 of its potential returns per unit of risk. Passat Socit Anonyme is currently generating about -0.15 per unit of risk. If you would invest  841.00  in OVH Groupe SAS on September 18, 2024 and sell it today you would lose (1.00) from holding OVH Groupe SAS or give up 0.12% of portfolio value over 90 days.

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

OVH Groupe SAS  vs.  Passat Socit Anonyme

OVH Groupe SAS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OVH Groupe SAS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, OVH Groupe sustained solid returns over the last few months and may actually be approaching a breakup point.

Passat Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with OVH Groupe and Passat Socit

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

The idea behind OVH Groupe SAS and Passat Socit Anonyme 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.