Correlation Between Eramet SA and Poxel SA
Can any of the company-specific risk be diversified away by investing in both Eramet SA and Poxel 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 Eramet SA and Poxel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eramet SA and Poxel SA, you can compare the effects of market volatilities on Eramet SA and Poxel 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 Eramet SA with a short position of Poxel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eramet SA and Poxel SA.
Diversification Opportunities for Eramet SA and Poxel SA
Poor diversification
The 3 months correlation between Eramet and Poxel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA and Eramet 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 Eramet SA are associated (or correlated) with Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Eramet SA i.e., Eramet SA and Poxel SA go up and down completely randomly.
Pair Corralation between Eramet SA and Poxel SA
Assuming the 90 days trading horizon Eramet SA is expected to generate 0.96 times more return on investment than Poxel SA. However, Eramet SA is 1.04 times less risky than Poxel SA. It trades about -0.05 of its potential returns per unit of risk. Poxel SA is currently generating about -0.64 per unit of risk. If you would invest 5,380 in Eramet SA on August 27, 2024 and sell it today you would lose (150.00) from holding Eramet SA or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eramet SA vs. Poxel SA
Performance |
| Timeline |
| Eramet SA |
| Poxel SA |
Eramet SA and Poxel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eramet SA and Poxel SA
The main advantage of trading using opposite Eramet SA and Poxel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eramet SA position performs unexpectedly, Poxel 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 Poxel SA will offset losses from the drop in Poxel SA's long position.The idea behind Eramet SA and Poxel SA 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.| Poxel SA vs. Axway Software | Poxel SA vs. Gaztransport Technigaz SAS | Poxel SA vs. ZCCM Investments Holdings | Poxel SA vs. Mediantechn |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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