Correlation Between Grolleau SAS and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Grolleau SAS 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 Grolleau SAS and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grolleau SAS and Eramet SA, you can compare the effects of market volatilities on Grolleau SAS 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 Grolleau SAS with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grolleau SAS and Eramet SA.
Diversification Opportunities for Grolleau SAS and Eramet SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grolleau and Eramet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grolleau SAS and Eramet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA and Grolleau SAS 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 Grolleau SAS 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 Grolleau SAS i.e., Grolleau SAS and Eramet SA go up and down completely randomly.
Pair Corralation between Grolleau SAS and Eramet SA
Assuming the 90 days trading horizon Grolleau SAS is expected to generate 1.61 times more return on investment than Eramet SA. However, Grolleau SAS is 1.61 times more volatile than Eramet SA. It trades about 0.1 of its potential returns per unit of risk. Eramet SA is currently generating about -0.11 per unit of risk. If you would invest 389.00 in Grolleau SAS on September 1, 2024 and sell it today you would earn a total of 29.00 from holding Grolleau SAS or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Grolleau SAS vs. Eramet SA
Performance |
| Timeline |
| Grolleau SAS |
| Eramet SA |
Grolleau SAS and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grolleau SAS and Eramet SA
The main advantage of trading using opposite Grolleau SAS and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grolleau SAS 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.| Grolleau SAS vs. Berkem Group SA | Grolleau SAS vs. Waga Energy SA | Grolleau SAS vs. Entech SE SAS | Grolleau SAS vs. Orapi SA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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