Correlation Between Europlasma and BIO UV
Can any of the company-specific risk be diversified away by investing in both Europlasma and BIO UV 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 Europlasma and BIO UV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europlasma SA and BIO UV Group, you can compare the effects of market volatilities on Europlasma and BIO UV 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 Europlasma with a short position of BIO UV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europlasma and BIO UV.
Diversification Opportunities for Europlasma and BIO UV
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europlasma and BIO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV Group and Europlasma 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 Europlasma SA are associated (or correlated) with BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Europlasma i.e., Europlasma and BIO UV go up and down completely randomly.
Pair Corralation between Europlasma and BIO UV
Assuming the 90 days trading horizon Europlasma SA is expected to generate 12.49 times more return on investment than BIO UV. However, Europlasma is 12.49 times more volatile than BIO UV Group. It trades about 0.05 of its potential returns per unit of risk. BIO UV Group is currently generating about -0.06 per unit of risk. If you would invest 50.00 in Europlasma SA on September 3, 2024 and sell it today you would lose (40.50) from holding Europlasma SA or give up 81.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europlasma SA vs. BIO UV Group
Performance |
| Timeline |
| Europlasma SA |
| BIO UV Group |
Europlasma and BIO UV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europlasma and BIO UV
The main advantage of trading using opposite Europlasma and BIO UV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europlasma position performs unexpectedly, BIO UV 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 BIO UV will offset losses from the drop in BIO UV's long position.The idea behind Europlasma SA and BIO UV Group 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.| BIO UV vs. Veolia Environnement VE | BIO UV vs. Derichebourg | BIO UV vs. Seche Environnem | BIO UV vs. Groupe Pizzorno Environnement |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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