Correlation Between Rubis SCA and Vallourec

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

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

Diversification Opportunities for Rubis SCA and Vallourec

0.79

Correlation Coefficient

Rubis SCA  Vallourec

Poor diversification

The 3 months correlation between Rubis and Vallourec is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec and Rubis SCA 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 Rubis SCA are associated (or correlated) with Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Rubis SCA i.e., Rubis SCA and Vallourec go up and down completely randomly.

Pair Corralation between Rubis SCA and Vallourec

Assuming the 90 days trading horizon Rubis SCA is expected to under-perform the Vallourec. But the stock apears to be less risky and, when comparing its historical volatility, Rubis SCA is 1.02 times less risky than Vallourec. The stock trades about 0.0 of its potential returns per unit of risk. The Vallourec is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,351  in Vallourec on December 5, 2024 and sell it today you would earn a total of  389.00  from holding Vallourec or generate 28.79% return on investment over 90 days.

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

Rubis SCA  vs.  Vallourec

Rubis SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Rubis SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Vallourec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vallourec are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vallourec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rubis SCA and Vallourec

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

The idea behind Rubis SCA and Vallourec 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.