Correlation Between Nacon Sa and Energisme
Can any of the company-specific risk be diversified away by investing in both Nacon Sa and Energisme 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 Nacon Sa and Energisme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nacon Sa and Energisme, you can compare the effects of market volatilities on Nacon Sa and Energisme 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 Nacon Sa with a short position of Energisme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nacon Sa and Energisme.
Diversification Opportunities for Nacon Sa and Energisme
Very good diversification
The 3 months correlation between Nacon and Energisme is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nacon Sa and Energisme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisme and Nacon 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 Nacon Sa are associated (or correlated) with Energisme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisme has no effect on the direction of Nacon Sa i.e., Nacon Sa and Energisme go up and down completely randomly.
Pair Corralation between Nacon Sa and Energisme
Assuming the 90 days trading horizon Nacon Sa is expected to under-perform the Energisme. But the stock apears to be less risky and, when comparing its historical volatility, Nacon Sa is 1.29 times less risky than Energisme. The stock trades about -0.18 of its potential returns per unit of risk. The Energisme is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 0.64 in Energisme on August 26, 2024 and sell it today you would lose (0.05) from holding Energisme or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nacon Sa vs. Energisme
Performance |
| Timeline |
| Nacon Sa |
| Energisme |
Nacon Sa and Energisme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nacon Sa and Energisme
The main advantage of trading using opposite Nacon Sa and Energisme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nacon Sa position performs unexpectedly, Energisme 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 Energisme will offset losses from the drop in Energisme's long position.| Nacon Sa vs. DONTNOD Entertainment SA | Nacon Sa vs. Manitou BF SA | Nacon Sa vs. Ossiam Minimum Variance | Nacon Sa vs. Granite 3x LVMH |
| Energisme vs. Kerlink SAS | Energisme vs. Nacon Sa | Energisme vs. Agripower France Sa | Energisme vs. Hydrogen Refueling Solutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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