Correlation Between Veolia Environnement and PT Jasa

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

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

Diversification Opportunities for Veolia Environnement and PT Jasa

0.71

Correlation Coefficient

Veolia Environnement  PT Jasa

Poor diversification

The 3 months correlation between Veolia and 0JM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and PT Jasa Marga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jasa Marga and Veolia Environnement 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 Veolia Environnement SA are associated (or correlated) with PT Jasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jasa Marga has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and PT Jasa go up and down completely randomly.

Pair Corralation between Veolia Environnement and PT Jasa

Assuming the 90 days horizon Veolia Environnement SA is expected to generate 0.27 times more return on investment than PT Jasa. However, Veolia Environnement SA is 3.73 times less risky than PT Jasa. It trades about 0.1 of its potential returns per unit of risk. PT Jasa Marga is currently generating about -0.03 per unit of risk. If you would invest  2,680  in Veolia Environnement SA on October 23, 2024 and sell it today you would earn a total of  56.00  from holding Veolia Environnement SA or generate 2.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

Veolia Environnement SA  vs.  PT Jasa Marga

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PT Jasa Marga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Jasa Marga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Veolia Environnement and PT Jasa

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

The idea behind Veolia Environnement SA and PT Jasa Marga 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.