Correlation Between Renault SA and FDG Electric

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

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

Diversification Opportunities for Renault SA and FDG Electric

0.0

Correlation Coefficient

Renault SA  FDG Electric

Pay attention - limited upside

The 3 months correlation between Renault and FDG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and FDG Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDG Electric Vehicles and Renault 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 Renault SA are associated (or correlated) with FDG Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDG Electric Vehicles has no effect on the direction of Renault SA i.e., Renault SA and FDG Electric go up and down completely randomly.

Pair Corralation between Renault SA and FDG Electric

If you would invest  4,100  in Renault SA on October 5, 2024 and sell it today you would earn a total of  740.00  from holding Renault SA or generate 18.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Renault SA  vs.  FDG Electric Vehicles

Renault SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renault SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Renault SA reported solid returns over the last few months and may actually be approaching a breakup point.

FDG Electric Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FDG Electric Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, FDG Electric is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Renault SA and FDG Electric

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

The idea behind Renault SA and FDG Electric Vehicles 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.