Correlation Between Trigano SA and Prodways Group

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

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

Diversification Opportunities for Trigano SA and Prodways Group

-0.6

Correlation Coefficient

Trigano SA  Prodways Group

Excellent diversification

The 3 months correlation between Trigano and Prodways is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Trigano SA and Prodways Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodways Group SA and Trigano 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 Trigano SA are associated (or correlated) with Prodways Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodways Group SA has no effect on the direction of Trigano SA i.e., Trigano SA and Prodways Group go up and down completely randomly.

Pair Corralation between Trigano SA and Prodways Group

Assuming the 90 days trading horizon Trigano SA is expected to generate 0.74 times more return on investment than Prodways Group. However, Trigano SA is 1.34 times less risky than Prodways Group. It trades about 0.16 of its potential returns per unit of risk. Prodways Group SA is currently generating about -0.03 per unit of risk. If you would invest  9,717  in Trigano SA on September 16, 2024 and sell it today you would earn a total of  2,713  from holding Trigano SA or generate 27.92% return on investment over 90 days.

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

Trigano SA  vs.  Prodways Group SA

Trigano SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Prodways Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prodways Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Trigano SA and Prodways Group

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

The idea behind Trigano SA and Prodways Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.