Correlation Between Verallia and Samse SA

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

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

Diversification Opportunities for Verallia and Samse SA

0.48

Correlation Coefficient

Verallia  Samse SA

Very weak diversification

The 3 months correlation between Verallia and Samse is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Verallia and Samse SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samse 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 Samse SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samse SA has no effect on the direction of Verallia i.e., Verallia and Samse SA go up and down completely randomly.

Pair Corralation between Verallia and Samse SA

Assuming the 90 days trading horizon Verallia is expected to under-perform the Samse SA. In addition to that, Verallia is 1.37 times more volatile than Samse SA. It trades about -0.04 of its total potential returns per unit of risk. Samse SA is currently generating about -0.03 per unit of volatility. If you would invest  14,450  in Samse SA on September 13, 2024 and sell it today you would lose (650.00) from holding Samse SA or give up 4.5% of portfolio value over 90 days.

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

Verallia  vs.  Samse SA

Verallia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verallia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Verallia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samse SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samse SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samse SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Verallia and Samse SA

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

The idea behind Verallia and Samse 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.