Correlation Between Schneider Electric and Rosinbomb

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Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Rosinbomb 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 Schneider Electric and Rosinbomb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SA and Rosinbomb, you can compare the effects of market volatilities on Schneider Electric and Rosinbomb 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 Schneider Electric with a short position of Rosinbomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Rosinbomb.

Diversification Opportunities for Schneider Electric and Rosinbomb

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Schneider and Rosinbomb is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb and Schneider Electric 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 Schneider Electric SA are associated (or correlated) with Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of Schneider Electric i.e., Schneider Electric and Rosinbomb go up and down completely randomly.

Pair Corralation between Schneider Electric and Rosinbomb

Assuming the 90 days horizon Schneider Electric is expected to generate 4.87 times less return on investment than Rosinbomb. But when comparing it to its historical volatility, Schneider Electric SA is 9.59 times less risky than Rosinbomb. It trades about 0.09 of its potential returns per unit of risk. Rosinbomb is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.35  in Rosinbomb on September 6, 2024 and sell it today you would lose (1.00) from holding Rosinbomb or give up 74.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Schneider Electric SA  vs.  Rosinbomb

 Performance 
       Timeline  
Schneider Electric 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Schneider Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Rosinbomb 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rosinbomb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Schneider Electric and Rosinbomb Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Schneider Electric and Rosinbomb

The main advantage of trading using opposite Schneider Electric and Rosinbomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Rosinbomb 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 Rosinbomb will offset losses from the drop in Rosinbomb's long position.
The idea behind Schneider Electric SA and Rosinbomb 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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