Correlation Between Aramis SAS and Neoen SA
Can any of the company-specific risk be diversified away by investing in both Aramis SAS and Neoen 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 Aramis SAS and Neoen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aramis SAS and Neoen SA, you can compare the effects of market volatilities on Aramis SAS and Neoen 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 Aramis SAS with a short position of Neoen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramis SAS and Neoen SA.
Diversification Opportunities for Aramis SAS and Neoen SA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aramis and Neoen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aramis SAS and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and Aramis 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 Aramis SAS are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of Aramis SAS i.e., Aramis SAS and Neoen SA go up and down completely randomly.
Pair Corralation between Aramis SAS and Neoen SA
Assuming the 90 days trading horizon Aramis SAS is expected to generate 10.36 times more return on investment than Neoen SA. However, Aramis SAS is 10.36 times more volatile than Neoen SA. It trades about 0.26 of its potential returns per unit of risk. Neoen SA is currently generating about 0.16 per unit of risk. If you would invest 524.00 in Aramis SAS on September 4, 2024 and sell it today you would earn a total of 218.00 from holding Aramis SAS or generate 41.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aramis SAS vs. Neoen SA
Performance |
| Timeline |
| Aramis SAS |
| Neoen SA |
Aramis SAS and Neoen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aramis SAS and Neoen SA
The main advantage of trading using opposite Aramis SAS and Neoen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramis SAS position performs unexpectedly, Neoen 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 Neoen SA will offset losses from the drop in Neoen SA's long position.| Aramis SAS vs. LVMH Mot Hennessy | Aramis SAS vs. LOreal SA | Aramis SAS vs. Hermes International SCA | Aramis SAS vs. Manitou BF SA |
| Neoen SA vs. Voltalia SA | Neoen SA vs. Gaztransport Technigaz SAS | Neoen SA vs. Worldline SA | Neoen SA vs. Rubis SCA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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