Correlation Between Veolia Environnement and Netmedia Group

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

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

Diversification Opportunities for Veolia Environnement and Netmedia Group

-0.15

Correlation Coefficient

Veolia Environnement  Netmedia Group

Good diversification

The 3 months correlation between Veolia and Netmedia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Netmedia Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmedia Group SA 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 VE are associated (or correlated) with Netmedia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmedia Group SA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Netmedia Group go up and down completely randomly.

Pair Corralation between Veolia Environnement and Netmedia Group

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.35 times more return on investment than Netmedia Group. However, Veolia Environnement VE is 2.88 times less risky than Netmedia Group. It trades about -0.25 of its potential returns per unit of risk. Netmedia Group SA is currently generating about -0.22 per unit of risk. If you would invest  2,803  in Veolia Environnement VE on October 12, 2024 and sell it today you would lose (107.00) from holding Veolia Environnement VE or give up 3.82% of portfolio value over 90 days.

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

Veolia Environnement VE  vs.  Netmedia Group SA

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Netmedia Group SA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netmedia Group SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Netmedia Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Veolia Environnement and Netmedia Group

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

The idea behind Veolia Environnement VE and Netmedia Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.