Correlation Between Neolife SA and Derichebourg
Can any of the company-specific risk be diversified away by investing in both Neolife SA and Derichebourg 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 Neolife SA and Derichebourg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neolife SA and Derichebourg, you can compare the effects of market volatilities on Neolife SA and Derichebourg 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 Neolife SA with a short position of Derichebourg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neolife SA and Derichebourg.
Diversification Opportunities for Neolife SA and Derichebourg
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Neolife and Derichebourg is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Neolife SA and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg and Neolife SA 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 Neolife SA are associated (or correlated) with Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Neolife SA i.e., Neolife SA and Derichebourg go up and down completely randomly.
Pair Corralation between Neolife SA and Derichebourg
Assuming the 90 days trading horizon Neolife SA is expected to generate 2.99 times more return on investment than Derichebourg. However, Neolife SA is 2.99 times more volatile than Derichebourg. It trades about 0.04 of its potential returns per unit of risk. Derichebourg is currently generating about 0.0 per unit of risk. If you would invest 4.44 in Neolife SA on September 4, 2024 and sell it today you would earn a total of 1.64 from holding Neolife SA or generate 36.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neolife SA vs. Derichebourg
Performance |
| Timeline |
| Neolife SA |
| Derichebourg |
Neolife SA and Derichebourg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neolife SA and Derichebourg
The main advantage of trading using opposite Neolife SA and Derichebourg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neolife SA position performs unexpectedly, Derichebourg 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 Derichebourg will offset losses from the drop in Derichebourg's long position.| Neolife SA vs. Derichebourg | Neolife SA vs. Mersen SA | Neolife SA vs. Trigano SA | Neolife SA vs. Chargeurs SA |
| Derichebourg vs. Mersen SA | Derichebourg vs. Trigano SA | Derichebourg vs. Chargeurs SA | Derichebourg vs. Eramet 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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