Correlation Between Neoen SA and CHUGOKU EL
Can any of the company-specific risk be diversified away by investing in both Neoen SA and CHUGOKU EL 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 Neoen SA and CHUGOKU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neoen SA and CHUGOKU EL PWR, you can compare the effects of market volatilities on Neoen SA and CHUGOKU EL 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 Neoen SA with a short position of CHUGOKU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neoen SA and CHUGOKU EL.
Diversification Opportunities for Neoen SA and CHUGOKU EL
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Neoen and CHUGOKU is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and CHUGOKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHUGOKU EL PWR and Neoen 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 Neoen SA are associated (or correlated) with CHUGOKU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHUGOKU EL PWR has no effect on the direction of Neoen SA i.e., Neoen SA and CHUGOKU EL go up and down completely randomly.
Pair Corralation between Neoen SA and CHUGOKU EL
Assuming the 90 days horizon Neoen SA is expected to generate 0.2 times more return on investment than CHUGOKU EL. However, Neoen SA is 5.02 times less risky than CHUGOKU EL. It trades about -0.02 of its potential returns per unit of risk. CHUGOKU EL PWR is currently generating about -0.12 per unit of risk. If you would invest 3,922 in Neoen SA on September 4, 2024 and sell it today you would lose (8.00) from holding Neoen SA or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neoen SA vs. CHUGOKU EL PWR
Performance |
| Timeline |
| Neoen SA |
| CHUGOKU EL PWR |
Neoen SA and CHUGOKU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neoen SA and CHUGOKU EL
The main advantage of trading using opposite Neoen SA and CHUGOKU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neoen SA position performs unexpectedly, CHUGOKU EL 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 CHUGOKU EL will offset losses from the drop in CHUGOKU EL's long position.The idea behind Neoen SA and CHUGOKU EL PWR 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.| CHUGOKU EL vs. ELMOS SEMICONDUCTOR | CHUGOKU EL vs. QBE Insurance Group | CHUGOKU EL vs. MagnaChip Semiconductor Corp | CHUGOKU EL vs. Elmos Semiconductor SE |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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