Correlation Between Atos SE and Vallourec
Can any of the company-specific risk be diversified away by investing in both Atos SE and Vallourec 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 Atos SE and Vallourec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atos SE and Vallourec, you can compare the effects of market volatilities on Atos SE and Vallourec 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 Atos SE with a short position of Vallourec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atos SE and Vallourec.
Diversification Opportunities for Atos SE and Vallourec
Poor diversification
The 3 months correlation between Atos and Vallourec is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Atos SE and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec and Atos SE 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 Atos SE are associated (or correlated) with Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Atos SE i.e., Atos SE and Vallourec go up and down completely randomly.
Pair Corralation between Atos SE and Vallourec
Assuming the 90 days trading horizon Atos SE is expected to generate 85.14 times more return on investment than Vallourec. However, Atos SE is 85.14 times more volatile than Vallourec. It trades about 0.22 of its potential returns per unit of risk. Vallourec is currently generating about 0.31 per unit of risk. If you would invest 0.52 in Atos SE on August 27, 2024 and sell it today you would earn a total of 30.48 from holding Atos SE or generate 5861.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atos SE vs. Vallourec
Performance |
| Timeline |
| Atos SE |
| Vallourec |
Atos SE and Vallourec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atos SE and Vallourec
The main advantage of trading using opposite Atos SE and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atos SE position performs unexpectedly, Vallourec 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 Vallourec will offset losses from the drop in Vallourec's long position.The idea behind Atos SE and Vallourec 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.| Vallourec vs. Alstom SA | Vallourec vs. Compagnie de Saint Gobain | Vallourec vs. Bouygues SA | Vallourec vs. Manitou BF 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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