Correlation Between Emova Group and Adomos SA
Can any of the company-specific risk be diversified away by investing in both Emova Group and Adomos 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 Emova Group and Adomos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emova Group SA and Adomos SA, you can compare the effects of market volatilities on Emova Group and Adomos 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 Emova Group with a short position of Adomos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emova Group and Adomos SA.
Diversification Opportunities for Emova Group and Adomos SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Emova and Adomos is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Emova Group SA and Adomos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adomos SA and Emova Group 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 Emova Group SA are associated (or correlated) with Adomos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adomos SA has no effect on the direction of Emova Group i.e., Emova Group and Adomos SA go up and down completely randomly.
Pair Corralation between Emova Group and Adomos SA
Assuming the 90 days trading horizon Emova Group is expected to generate 9.12 times less return on investment than Adomos SA. But when comparing it to its historical volatility, Emova Group SA is 8.6 times less risky than Adomos SA. It trades about 0.01 of its potential returns per unit of risk. Adomos SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Adomos SA on September 3, 2024 and sell it today you would lose (3,500) from holding Adomos SA or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emova Group SA vs. Adomos SA
Performance |
| Timeline |
| Emova Group SA |
| Adomos SA |
Emova Group and Adomos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emova Group and Adomos SA
The main advantage of trading using opposite Emova Group and Adomos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emova Group position performs unexpectedly, Adomos 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 Adomos SA will offset losses from the drop in Adomos SA's long position.| Emova Group vs. Claranova SE | Emova Group vs. Nextedia | Emova Group vs. Orapi SA | Emova Group vs. Acheter Louer |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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