Correlation Between Voltalia and Arkema SA

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

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

Diversification Opportunities for Voltalia and Arkema SA

0.74

Correlation Coefficient

Voltalia  Arkema SA

Poor diversification

The 3 months correlation between Voltalia and Arkema is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Voltalia SA and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and Voltalia 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 Voltalia SA are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of Voltalia i.e., Voltalia and Arkema SA go up and down completely randomly.

Pair Corralation between Voltalia and Arkema SA

Assuming the 90 days trading horizon Voltalia SA is expected to generate 1.67 times more return on investment than Arkema SA. However, Voltalia is 1.67 times more volatile than Arkema SA. It trades about 0.02 of its potential returns per unit of risk. Arkema SA is currently generating about -0.07 per unit of risk. If you would invest  757.00  in Voltalia SA on September 3, 2024 and sell it today you would earn a total of  11.00  from holding Voltalia SA or generate 1.45% return on investment over 90 days.

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

Voltalia SA  vs.  Arkema SA

Voltalia SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voltalia SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Voltalia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Arkema SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkema SA 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.

Pair Trading with Voltalia and Arkema SA

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

The idea behind Voltalia SA and Arkema 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.