Correlation Between Seche Environnem and Chargeurs

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

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

Diversification Opportunities for Seche Environnem and Chargeurs

-0.22

Correlation Coefficient

Seche Environnem  Chargeurs

Very good diversification

The 3 months correlation between Seche and Chargeurs is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnem and Chargeurs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chargeurs SA and Seche Environnem 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 Seche Environnem 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 Seche Environnem i.e., Seche Environnem and Chargeurs go up and down completely randomly.

Pair Corralation between Seche Environnem and Chargeurs

Assuming the 90 days trading horizon Seche Environnem is expected to under-perform the Chargeurs. In addition to that, Seche Environnem is 1.96 times more volatile than Chargeurs SA. It trades about -0.01 of its total potential returns per unit of risk. Chargeurs SA is currently generating about 0.15 per unit of volatility. If you would invest  988.00  in Chargeurs SA on October 22, 2024 and sell it today you would earn a total of  34.00  from holding Chargeurs SA or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Seche Environnem  vs.  Chargeurs SA

Seche Environnem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 somewhat strong forward indicators, Chargeurs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seche Environnem and Chargeurs

The main advantage of trading using opposite Seche Environnem and Chargeurs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seche Environnem 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 Seche Environnem 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.