Correlation Between Vallourec and Rubis SCA

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

By analyzing existing cross correlation between Vallourec and Rubis SCA, you can compare the effects of market volatilities on Vallourec and Rubis 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 Vallourec with a short position of Rubis SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Rubis SCA.

Diversification Opportunities for Vallourec and Rubis SCA

0.27

Correlation Coefficient

Vallourec  Rubis SCA

Modest diversification

The 3 months correlation between Vallourec and Rubis is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Rubis SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubis SCA and Vallourec 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 Vallourec are associated (or correlated) with Rubis SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubis SCA has no effect on the direction of Vallourec i.e., Vallourec and Rubis SCA go up and down completely randomly.

Pair Corralation between Vallourec and Rubis SCA

Assuming the 90 days horizon Vallourec is expected to generate 1.41 times less return on investment than Rubis SCA. In addition to that, Vallourec is 1.1 times more volatile than Rubis SCA. It trades about 0.07 of its total potential returns per unit of risk. Rubis SCA is currently generating about 0.11 per unit of volatility. If you would invest  2,346  in Rubis SCA on December 29, 2024 and sell it today you would earn a total of  292.00  from holding Rubis SCA or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Vallourec  vs.  Rubis SCA

Vallourec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vallourec are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vallourec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rubis SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Rubis SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vallourec and Rubis SCA

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

The idea behind Vallourec and Rubis 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.