Correlation Between Derichebourg and Neolife SA
Can any of the company-specific risk be diversified away by investing in both Derichebourg and Neolife 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 Derichebourg and Neolife SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Derichebourg and Neolife SA, you can compare the effects of market volatilities on Derichebourg and Neolife 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 Derichebourg with a short position of Neolife SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derichebourg and Neolife SA.
Diversification Opportunities for Derichebourg and Neolife SA
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Derichebourg and Neolife is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Neolife SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neolife SA and Derichebourg 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 Derichebourg are associated (or correlated) with Neolife SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neolife SA has no effect on the direction of Derichebourg i.e., Derichebourg and Neolife SA go up and down completely randomly.
Pair Corralation between Derichebourg and Neolife SA
Assuming the 90 days trading horizon Derichebourg is expected to generate 1.5 times less return on investment than Neolife SA. But when comparing it to its historical volatility, Derichebourg is 1.84 times less risky than Neolife SA. It trades about 0.04 of its potential returns per unit of risk. Neolife SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6.34 in Neolife SA on January 23, 2025 and sell it today you would earn a total of 0.96 from holding Neolife SA or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Derichebourg vs. Neolife SA
Performance |
| Timeline |
| Derichebourg |
| Neolife SA |
Derichebourg and Neolife SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derichebourg and Neolife SA
The main advantage of trading using opposite Derichebourg and Neolife SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derichebourg position performs unexpectedly, Neolife 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 Neolife SA will offset losses from the drop in Neolife SA's long position.| Derichebourg vs. Eramet SA | Derichebourg vs. Trigano SA | Derichebourg vs. Soitec SA | Derichebourg 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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