Correlation Between Hopium SAS and Charwood Energy
Can any of the company-specific risk be diversified away by investing in both Hopium SAS and Charwood Energy 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 Hopium SAS and Charwood Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hopium SAS and Charwood Energy SA, you can compare the effects of market volatilities on Hopium SAS and Charwood Energy 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 Hopium SAS with a short position of Charwood Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hopium SAS and Charwood Energy.
Diversification Opportunities for Hopium SAS and Charwood Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hopium and Charwood is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hopium SAS and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy SA and Hopium 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 Hopium SAS are associated (or correlated) with Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of Hopium SAS i.e., Hopium SAS and Charwood Energy go up and down completely randomly.
Pair Corralation between Hopium SAS and Charwood Energy
Assuming the 90 days trading horizon Hopium SAS is expected to under-perform the Charwood Energy. But the stock apears to be less risky and, when comparing its historical volatility, Hopium SAS is 1.1 times less risky than Charwood Energy. The stock trades about -0.41 of its potential returns per unit of risk. The Charwood Energy SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Charwood Energy SA on October 20, 2024 and sell it today you would lose (24.00) from holding Charwood Energy SA or give up 9.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hopium SAS vs. Charwood Energy SA
Performance |
| Timeline |
| Hopium SAS |
| Charwood Energy SA |
Hopium SAS and Charwood Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hopium SAS and Charwood Energy
The main advantage of trading using opposite Hopium SAS and Charwood Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hopium SAS position performs unexpectedly, Charwood Energy 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 Charwood Energy will offset losses from the drop in Charwood Energy's long position.| Hopium SAS vs. LVMH Mot Hennessy | Hopium SAS vs. LOreal SA | Hopium SAS vs. Hermes International SCA | Hopium SAS vs. Manitou BF SA |
| Charwood Energy vs. Hydrogene De France | Charwood Energy vs. Hydrogen Refueling Solutions | Charwood Energy vs. Neoen SA | Charwood Energy vs. Hopium SAS |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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