Correlation Between Voltalia and Entech SE

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

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

Diversification Opportunities for Voltalia and Entech SE

0.22

Correlation Coefficient

Voltalia  Entech SE

Modest diversification

The 3 months correlation between Voltalia and Entech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Voltalia SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS 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 Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Voltalia i.e., Voltalia and Entech SE go up and down completely randomly.

Pair Corralation between Voltalia and Entech SE

Assuming the 90 days trading horizon Voltalia is expected to generate 644.5 times less return on investment than Entech SE. But when comparing it to its historical volatility, Voltalia SA is 1.19 times less risky than Entech SE. It trades about 0.0 of its potential returns per unit of risk. Entech SE SAS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  590.00  in Entech SE SAS on December 29, 2024 and sell it today you would earn a total of  204.00  from holding Entech SE SAS or generate 34.58% return on investment over 90 days.

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

Voltalia SA  vs.  Entech SE SAS

Voltalia SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voltalia SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Entech SE SAS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entech SE SAS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Entech SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voltalia and Entech SE

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

The idea behind Voltalia SA and Entech SE SAS 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.