Correlation Between Neoen SA and Vallourec
Can any of the company-specific risk be diversified away by investing in both Neoen SA and Vallourec 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 Vallourec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neoen SA and Vallourec, you can compare the effects of market volatilities on Neoen SA and Vallourec 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 Vallourec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neoen SA and Vallourec.
Diversification Opportunities for Neoen SA and Vallourec
Average diversification
The 3 months correlation between Neoen and Vallourec is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec 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 Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Neoen SA i.e., Neoen SA and Vallourec go up and down completely randomly.
Pair Corralation between Neoen SA and Vallourec
Assuming the 90 days trading horizon Neoen SA is expected to under-perform the Vallourec. But the stock apears to be less risky and, when comparing its historical volatility, Neoen SA is 3.51 times less risky than Vallourec. The stock trades about -0.15 of its potential returns per unit of risk. The Vallourec is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,857 in Vallourec on December 26, 2024 and sell it today you would lose (26.00) from holding Vallourec or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Neoen SA vs. Vallourec
Performance |
| Timeline |
| Neoen SA |
| Vallourec |
Neoen SA and Vallourec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neoen SA and Vallourec
The main advantage of trading using opposite Neoen SA and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neoen SA position performs unexpectedly, Vallourec 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 Vallourec will offset losses from the drop in Vallourec's long position.| Neoen SA vs. Voltalia SA | Neoen SA vs. Gaztransport Technigaz SAS | Neoen SA vs. Worldline SA | Neoen SA vs. Rubis SCA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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