Correlation Between Verallia and Groupe Guillin

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

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

Diversification Opportunities for Verallia and Groupe Guillin

-0.66

Correlation Coefficient

Verallia  Groupe Guillin

Excellent diversification

The 3 months correlation between Verallia and Groupe is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Verallia and Groupe Guillin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Guillin SA and Verallia 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 Verallia are associated (or correlated) with Groupe Guillin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Guillin SA has no effect on the direction of Verallia i.e., Verallia and Groupe Guillin go up and down completely randomly.

Pair Corralation between Verallia and Groupe Guillin

Assuming the 90 days trading horizon Verallia is expected to generate 1.58 times more return on investment than Groupe Guillin. However, Verallia is 1.58 times more volatile than Groupe Guillin SA. It trades about 0.15 of its potential returns per unit of risk. Groupe Guillin SA is currently generating about -0.04 per unit of risk. If you would invest  2,362  in Verallia on December 29, 2024 and sell it today you would earn a total of  532.00  from holding Verallia or generate 22.52% return on investment over 90 days.

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

Verallia  vs.  Groupe Guillin SA

Verallia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verallia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Verallia sustained solid returns over the last few months and may actually be approaching a breakup point.

Groupe Guillin SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Verallia and Groupe Guillin

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

The idea behind Verallia and Groupe Guillin 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.