Correlation Between Veolia Environnement and Hotel Majestic

Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Hotel Majestic 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 Hotel Majestic 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 Hotel Majestic Cannes, you can compare the effects of market volatilities on Veolia Environnement and Hotel Majestic 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 Hotel Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Hotel Majestic.

Diversification Opportunities for Veolia Environnement and Hotel Majestic

-0.06

Correlation Coefficient

Veolia Environnement  Hotel Majestic

Good diversification

The 3 months correlation between Veolia and Hotel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Hotel Majestic Cannes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Majestic Cannes 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 Hotel Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Majestic Cannes has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Hotel Majestic go up and down completely randomly.

Pair Corralation between Veolia Environnement and Hotel Majestic

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.66 times more return on investment than Hotel Majestic. However, Veolia Environnement VE is 1.51 times less risky than Hotel Majestic. It trades about 0.1 of its potential returns per unit of risk. Hotel Majestic Cannes is currently generating about 0.01 per unit of risk. If you would invest  2,737  in Veolia Environnement VE on December 4, 2024 and sell it today you would earn a total of  179.00  from holding Veolia Environnement VE or generate 6.54% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Hotel Majestic Cannes

Veolia Environnement

Risk-Adjusted Performance

OK

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

Hotel Majestic Cannes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hotel Majestic Cannes has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hotel Majestic is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Veolia Environnement and Hotel Majestic

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

The idea behind Veolia Environnement VE and Hotel Majestic Cannes 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..