Correlation Between Poxel SA and Implanet

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

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

Diversification Opportunities for Poxel SA and Implanet

0.3

Correlation Coefficient

Poxel SA  Implanet

Weak diversification

The 3 months correlation between Poxel and Implanet is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Poxel SA and Implanet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Implanet SA and Poxel 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 Poxel SA are associated (or correlated) with Implanet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Implanet SA has no effect on the direction of Poxel SA i.e., Poxel SA and Implanet go up and down completely randomly.

Pair Corralation between Poxel SA and Implanet

Assuming the 90 days trading horizon Poxel SA is expected to generate 2.46 times more return on investment than Implanet. However, Poxel SA is 2.46 times more volatile than Implanet SA. It trades about 0.03 of its potential returns per unit of risk. Implanet SA is currently generating about 0.02 per unit of risk. If you would invest  20.00  in Poxel SA on December 4, 2024 and sell it today you would lose (3.00) from holding Poxel SA or give up 15.0% of portfolio value over 90 days.

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

Poxel SA  vs.  Implanet SA

Poxel SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Poxel SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Poxel SA reported solid returns over the last few months and may actually be approaching a breakup point.

Implanet SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Implanet SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Implanet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Poxel SA and Implanet

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

The idea behind Poxel SA and Implanet SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.