Correlation Between Vicat SA and Gaussin

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

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

Diversification Opportunities for Vicat SA and Gaussin

-0.62

Correlation Coefficient

Vicat SA  Gaussin

Excellent diversification

The 3 months correlation between Vicat and Gaussin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Gaussin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaussin 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 Gaussin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaussin has no effect on the direction of Vicat SA i.e., Vicat SA and Gaussin go up and down completely randomly.

Pair Corralation between Vicat SA and Gaussin

Assuming the 90 days trading horizon Vicat SA is expected to under-perform the Gaussin. But the stock apears to be less risky and, when comparing its historical volatility, Vicat SA is 23.44 times less risky than Gaussin. The stock trades about -0.13 of its potential returns per unit of risk. The Gaussin is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4.18  in Gaussin on September 23, 2024 and sell it today you would earn a total of  6.82  from holding Gaussin or generate 163.16% return on investment over 90 days.

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

Vicat SA  vs.  Gaussin

Vicat SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 4 (%) 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.

Gaussin

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaussin are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gaussin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vicat SA and Gaussin

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

The idea behind Vicat SA and Gaussin 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.