Correlation Between VANTIVA SA and Claranova

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

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

Diversification Opportunities for VANTIVA SA and Claranova

-0.19

Correlation Coefficient

VANTIVA SA  Claranova

Good diversification

The 3 months correlation between VANTIVA and Claranova is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding VANTIVA SA and Claranova SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Claranova SE and VANTIVA 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 VANTIVA SA are associated (or correlated) with Claranova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Claranova SE has no effect on the direction of VANTIVA SA i.e., VANTIVA SA and Claranova go up and down completely randomly.

Pair Corralation between VANTIVA SA and Claranova

Assuming the 90 days trading horizon VANTIVA SA is expected to generate 1.45 times more return on investment than Claranova. However, VANTIVA SA is 1.45 times more volatile than Claranova SE. It trades about -0.01 of its potential returns per unit of risk. Claranova SE is currently generating about -0.04 per unit of risk. If you would invest  23.00  in VANTIVA SA on September 28, 2024 and sell it today you would lose (11.00) from holding VANTIVA SA or give up 47.83% of portfolio value over 90 days.

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

VANTIVA SA  vs.  Claranova SE

VANTIVA SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VANTIVA SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VANTIVA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Claranova SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Claranova SE 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.

Pair Trading with VANTIVA SA and Claranova

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

The idea behind VANTIVA SA and Claranova SE 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.