Correlation Between Prodways Group and Chargeurs

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

Diversification Opportunities for Prodways Group and Chargeurs

0.58

Correlation Coefficient

Prodways Group  Chargeurs

Very weak diversification

The 3 months correlation between Prodways and Chargeurs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Chargeurs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chargeurs SA 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 Chargeurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chargeurs SA has no effect on the direction of Prodways Group i.e., Prodways Group and Chargeurs go up and down completely randomly.

Pair Corralation between Prodways Group and Chargeurs

Assuming the 90 days trading horizon Prodways Group SA is expected to generate 1.15 times more return on investment than Chargeurs. However, Prodways Group is 1.15 times more volatile than Chargeurs SA. It trades about -0.08 of its potential returns per unit of risk. Chargeurs SA is currently generating about -0.17 per unit of risk. If you would invest  50.00  in Prodways Group SA on September 3, 2024 and sell it today you would lose (6.00) from holding Prodways Group SA or give up 12.0% of portfolio value over 90 days.

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

Prodways Group SA  vs.  Chargeurs SA

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Prodways Group and Chargeurs

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

The idea behind Prodways Group SA and Chargeurs 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.