Correlation Between Prodways Group and Claranova

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

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

Diversification Opportunities for Prodways Group and Claranova

0.15

Correlation Coefficient

Prodways Group  Claranova

Average diversification

The 3 months correlation between Prodways and Claranova is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Claranova SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Claranova SE and Prodways Group 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 Prodways Group SA are associated (or correlated) with Claranova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Claranova SE has no effect on the direction of Prodways Group i.e., Prodways Group and Claranova go up and down completely randomly.

Pair Corralation between Prodways Group and Claranova

Assuming the 90 days trading horizon Prodways Group SA is expected to under-perform the Claranova. But the stock apears to be less risky and, when comparing its historical volatility, Prodways Group SA is 1.49 times less risky than Claranova. The stock trades about -0.02 of its potential returns per unit of risk. The Claranova SE is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  149.00  in Claranova SE on September 3, 2024 and sell it today you would lose (2.00) from holding Claranova SE or give up 1.34% of portfolio value over 90 days.

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

Prodways Group SA  vs.  Claranova SE

Prodways Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Claranova SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Prodways Group and Claranova

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

The idea behind Prodways Group SA and Claranova 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.