Correlation Between Vicat SA and Europlasma

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

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

Diversification Opportunities for Vicat SA and Europlasma

-0.41

Correlation Coefficient

Vicat SA  Europlasma

Very good diversification

The 3 months correlation between Vicat and Europlasma is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Europlasma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europlasma SA and Vicat 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 Vicat SA are associated (or correlated) with Europlasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europlasma SA has no effect on the direction of Vicat SA i.e., Vicat SA and Europlasma go up and down completely randomly.

Pair Corralation between Vicat SA and Europlasma

Assuming the 90 days trading horizon Vicat SA is expected to generate 108.17 times less return on investment than Europlasma. But when comparing it to its historical volatility, Vicat SA is 43.28 times less risky than Europlasma. It trades about 0.07 of its potential returns per unit of risk. Europlasma SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3.11  in Europlasma SA on September 27, 2024 and sell it today you would earn a total of  1.73  from holding Europlasma SA or generate 55.63% return on investment over 90 days.

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

Vicat SA  vs.  Europlasma SA

Vicat SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vicat SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Europlasma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europlasma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Europlasma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vicat SA and Europlasma

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

The idea behind Vicat SA and Europlasma 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 CEOs Directory module to screen CEOs from public companies around the world.