Correlation Between Adocia and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Adocia and Eramet 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 Adocia and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adocia and Eramet SA, you can compare the effects of market volatilities on Adocia and Eramet 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 Adocia with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and Eramet SA.
Diversification Opportunities for Adocia and Eramet SA
Pay attention - limited upside
The 3 months correlation between Adocia and Eramet is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Eramet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA and Adocia 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 Adocia are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA has no effect on the direction of Adocia i.e., Adocia and Eramet SA go up and down completely randomly.
Pair Corralation between Adocia and Eramet SA
Assuming the 90 days trading horizon Adocia is expected to generate 1.81 times more return on investment than Eramet SA. However, Adocia is 1.81 times more volatile than Eramet SA. It trades about 0.0 of its potential returns per unit of risk. Eramet SA is currently generating about -0.16 per unit of risk. If you would invest 884.00 in Adocia on September 1, 2024 and sell it today you would lose (134.00) from holding Adocia or give up 15.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adocia vs. Eramet SA
Performance |
| Timeline |
| Adocia |
| Eramet SA |
Adocia and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adocia and Eramet SA
The main advantage of trading using opposite Adocia and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adocia position performs unexpectedly, Eramet 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 Eramet SA will offset losses from the drop in Eramet SA's long position.The idea behind Adocia and Eramet 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.Check out your portfolio center.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |