Correlation Between Waga Energy and Hydrogene

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

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

Diversification Opportunities for Waga Energy and Hydrogene

0.67

Correlation Coefficient

Waga Energy  Hydrogene

Poor diversification

The 3 months correlation between Waga and Hydrogene is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Waga Energy SA and Hydrogene De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrogene De France and Waga Energy 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 Waga Energy SA are associated (or correlated) with Hydrogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrogene De France has no effect on the direction of Waga Energy i.e., Waga Energy and Hydrogene go up and down completely randomly.

Pair Corralation between Waga Energy and Hydrogene

Assuming the 90 days trading horizon Waga Energy SA is expected to under-perform the Hydrogene. But the stock apears to be less risky and, when comparing its historical volatility, Waga Energy SA is 1.82 times less risky than Hydrogene. The stock trades about -0.12 of its potential returns per unit of risk. The Hydrogene De France is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Hydrogene De France on October 25, 2024 and sell it today you would lose (88.00) from holding Hydrogene De France or give up 17.67% of portfolio value over 90 days.

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

Waga Energy SA  vs.  Hydrogene De France

Waga Energy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waga Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hydrogene De France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrogene De France has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Waga Energy and Hydrogene

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

The idea behind Waga Energy SA and Hydrogene De France 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.