Correlation Between Nacon Sa and Solutions
Can any of the company-specific risk be diversified away by investing in both Nacon Sa and Solutions 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 Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nacon Sa and Solutions 30 SE, you can compare the effects of market volatilities on Nacon Sa and Solutions 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 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nacon Sa and Solutions.
Diversification Opportunities for Nacon Sa and Solutions
Almost no diversification
The 3 months correlation between Nacon and Solutions is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nacon Sa and Solutions 30 SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solutions 30 SE 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 Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solutions 30 SE has no effect on the direction of Nacon Sa i.e., Nacon Sa and Solutions go up and down completely randomly.
Pair Corralation between Nacon Sa and Solutions
Assuming the 90 days trading horizon Nacon Sa is expected to under-perform the Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Nacon Sa is 1.03 times less risky than Solutions. The stock trades about -0.11 of its potential returns per unit of risk. The Solutions 30 SE is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 303.00 in Solutions 30 SE on August 31, 2024 and sell it today you would lose (215.00) from holding Solutions 30 SE or give up 70.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nacon Sa vs. Solutions 30 SE
Performance |
| Timeline |
| Nacon Sa |
| Solutions 30 SE |
Nacon Sa and Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nacon Sa and Solutions
The main advantage of trading using opposite Nacon Sa and Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nacon Sa position performs unexpectedly, Solutions 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 Solutions will offset losses from the drop in Solutions' long position.| Nacon Sa vs. BigBen Interactive | Nacon Sa vs. Neoen SA | Nacon Sa vs. Solutions 30 SE | Nacon Sa vs. Voltalia SA |
| Solutions vs. LVMH Mot Hennessy | Solutions vs. LOreal SA | Solutions vs. Hermes International SCA | Solutions vs. Manitou BF 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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