Correlation Between Coil SANV and Encres Dubuit
Can any of the company-specific risk be diversified away by investing in both Coil SANV and Encres Dubuit 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 Coil SANV and Encres Dubuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coil SANV and Encres Dubuit SA, you can compare the effects of market volatilities on Coil SANV and Encres Dubuit 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 Coil SANV with a short position of Encres Dubuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coil SANV and Encres Dubuit.
Diversification Opportunities for Coil SANV and Encres Dubuit
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coil and Encres is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Coil SANV and Encres Dubuit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encres Dubuit SA and Coil SANV 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 Coil SANV are associated (or correlated) with Encres Dubuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encres Dubuit SA has no effect on the direction of Coil SANV i.e., Coil SANV and Encres Dubuit go up and down completely randomly.
Pair Corralation between Coil SANV and Encres Dubuit
Assuming the 90 days trading horizon Coil SANV is expected to under-perform the Encres Dubuit. But the stock apears to be less risky and, when comparing its historical volatility, Coil SANV is 1.38 times less risky than Encres Dubuit. The stock trades about -0.22 of its potential returns per unit of risk. The Encres Dubuit SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Encres Dubuit SA on August 28, 2024 and sell it today you would earn a total of 54.00 from holding Encres Dubuit SA or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coil SANV vs. Encres Dubuit SA
Performance |
| Timeline |
| Coil SANV |
| Encres Dubuit SA |
Coil SANV and Encres Dubuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coil SANV and Encres Dubuit
The main advantage of trading using opposite Coil SANV and Encres Dubuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coil SANV position performs unexpectedly, Encres Dubuit 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 Encres Dubuit will offset losses from the drop in Encres Dubuit's long position.The idea behind Coil SANV and Encres Dubuit 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.| Encres Dubuit vs. Passat Socit Anonyme | Encres Dubuit vs. Gevelot | Encres Dubuit vs. Groupe Partouche SA | Encres Dubuit vs. EPC Groupe |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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