Correlation Between OVH Groupe and Solutions

Can any of the company-specific risk be diversified away by investing in both OVH Groupe and Solutions 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 Solutions 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 Solutions 30 SE, you can compare the effects of market volatilities on OVH Groupe and Solutions 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 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVH Groupe and Solutions.

Diversification Opportunities for OVH Groupe and Solutions

-0.7

Correlation Coefficient

OVH Groupe  Solutions

Excellent diversification

The 3 months correlation between OVH and Solutions is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding OVH Groupe SAS and Solutions 30 SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solutions 30 SE 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 Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solutions 30 SE has no effect on the direction of OVH Groupe i.e., OVH Groupe and Solutions go up and down completely randomly.

Pair Corralation between OVH Groupe and Solutions

Assuming the 90 days trading horizon OVH Groupe SAS is expected to under-perform the Solutions. But the stock apears to be less risky and, when comparing its historical volatility, OVH Groupe SAS is 1.63 times less risky than Solutions. The stock trades about -0.1 of its potential returns per unit of risk. The Solutions 30 SE is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Solutions 30 SE on December 1, 2024 and sell it today you would earn a total of  57.00  from holding Solutions 30 SE or generate 71.25% return on investment over 90 days.

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

OVH Groupe SAS  vs.  Solutions 30 SE

OVH Groupe SAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days OVH Groupe SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Solutions 30 SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solutions 30 SE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OVH Groupe and Solutions

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

The idea behind OVH Groupe SAS and Solutions 30 SE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.