Correlation Between Vicat SA and Touax SCA

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

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

Diversification Opportunities for Vicat SA and Touax SCA

0.51

Correlation Coefficient

Vicat SA  Touax SCA

Very weak diversification

The 3 months correlation between Vicat and Touax is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Touax SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touax SCA 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 Touax SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touax SCA has no effect on the direction of Vicat SA i.e., Vicat SA and Touax SCA go up and down completely randomly.

Pair Corralation between Vicat SA and Touax SCA

Assuming the 90 days trading horizon Vicat SA is expected to generate 0.86 times more return on investment than Touax SCA. However, Vicat SA is 1.16 times less risky than Touax SCA. It trades about 0.26 of its potential returns per unit of risk. Touax SCA is currently generating about 0.09 per unit of risk. If you would invest  3,560  in Vicat SA on December 5, 2024 and sell it today you would earn a total of  1,010  from holding Vicat SA or generate 28.37% return on investment over 90 days.

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

Vicat SA  vs.  Touax SCA

Vicat SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Touax SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touax SCA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Touax SCA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vicat SA and Touax SCA

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

The idea behind Vicat SA and Touax SCA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.