Correlation Between SPIE SA and Tarkett SA

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

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

Diversification Opportunities for SPIE SA and Tarkett SA

-0.74

Correlation Coefficient

SPIE SA  Tarkett SA

Pay attention - limited upside

The 3 months correlation between SPIE and Tarkett is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPIE SA and Tarkett SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarkett SA and SPIE 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 SPIE SA are associated (or correlated) with Tarkett SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarkett SA has no effect on the direction of SPIE SA i.e., SPIE SA and Tarkett SA go up and down completely randomly.

Pair Corralation between SPIE SA and Tarkett SA

Assuming the 90 days trading horizon SPIE SA is expected to under-perform the Tarkett SA. But the stock apears to be less risky and, when comparing its historical volatility, SPIE SA is 1.46 times less risky than Tarkett SA. The stock trades about -0.19 of its potential returns per unit of risk. The Tarkett SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  878.00  in Tarkett SA on September 13, 2024 and sell it today you would earn a total of  167.00  from holding Tarkett SA or generate 19.02% return on investment over 90 days.

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

SPIE SA  vs.  Tarkett SA

SPIE SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPIE 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 basic 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.

Tarkett SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tarkett SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tarkett SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPIE SA and Tarkett SA

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

The idea behind SPIE SA and Tarkett 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.