Correlation Between Veolia Environnement and Heritage Crystal

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

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

Diversification Opportunities for Veolia Environnement and Heritage Crystal

-0.77

Correlation Coefficient

Veolia Environnement  Heritage Crystal

Pay attention - limited upside

The 3 months correlation between Veolia and Heritage is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and Heritage Crystal Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Crystal Clean and Veolia Environnement 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 Veolia Environnement SA are associated (or correlated) with Heritage Crystal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Crystal Clean has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Heritage Crystal go up and down completely randomly.

Pair Corralation between Veolia Environnement and Heritage Crystal

Assuming the 90 days horizon Veolia Environnement is expected to generate 2.99 times less return on investment than Heritage Crystal. In addition to that, Veolia Environnement is 1.54 times more volatile than Heritage Crystal Clean. It trades about 0.03 of its total potential returns per unit of risk. Heritage Crystal Clean is currently generating about 0.13 per unit of volatility. If you would invest  3,270  in Heritage Crystal Clean on September 21, 2024 and sell it today you would earn a total of  1,406  from holding Heritage Crystal Clean or generate 43.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	32.63%
Values	Daily Returns

Veolia Environnement SA  vs.  Heritage Crystal Clean

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Heritage Crystal Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Crystal Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Heritage Crystal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Veolia Environnement and Heritage Crystal

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

The idea behind Veolia Environnement SA and Heritage Crystal Clean 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.