Correlation Between Hydrogene and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Hydrogene and Eramet 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 Hydrogene and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydrogene De France and Eramet SA, you can compare the effects of market volatilities on Hydrogene and Eramet 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 Hydrogene with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrogene and Eramet SA.
Diversification Opportunities for Hydrogene and Eramet SA
Poor diversification
The 3 months correlation between Hydrogene and Eramet is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogene De France and Eramet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA and Hydrogene 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 Hydrogene De France are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA has no effect on the direction of Hydrogene i.e., Hydrogene and Eramet SA go up and down completely randomly.
Pair Corralation between Hydrogene and Eramet SA
Assuming the 90 days trading horizon Hydrogene De France is expected to under-perform the Eramet SA. In addition to that, Hydrogene is 1.64 times more volatile than Eramet SA. It trades about -0.44 of its total potential returns per unit of risk. Eramet SA is currently generating about -0.11 per unit of volatility. If you would invest 5,405 in Eramet SA on September 1, 2024 and sell it today you would lose (340.00) from holding Eramet SA or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hydrogene De France vs. Eramet SA
Performance |
| Timeline |
| Hydrogene De France |
| Eramet SA |
Hydrogene and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrogene and Eramet SA
The main advantage of trading using opposite Hydrogene and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrogene position performs unexpectedly, Eramet 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| Hydrogene vs. Hydrogen Refueling Solutions | Hydrogene vs. Lhyfe SA | Hydrogene vs. Neoen SA | Hydrogene vs. Voltalia 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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