Correlation Between Vallourec and Acticor Biotech
Can any of the company-specific risk be diversified away by investing in both Vallourec and Acticor Biotech 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 Vallourec and Acticor Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and Acticor Biotech SAS, you can compare the effects of market volatilities on Vallourec and Acticor Biotech 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 Vallourec with a short position of Acticor Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Acticor Biotech.
Diversification Opportunities for Vallourec and Acticor Biotech
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vallourec and Acticor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Acticor Biotech SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acticor Biotech SAS and Vallourec 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 Vallourec are associated (or correlated) with Acticor Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acticor Biotech SAS has no effect on the direction of Vallourec i.e., Vallourec and Acticor Biotech go up and down completely randomly.
Pair Corralation between Vallourec and Acticor Biotech
Assuming the 90 days horizon Vallourec is expected to generate 3.19 times less return on investment than Acticor Biotech. But when comparing it to its historical volatility, Vallourec is 6.72 times less risky than Acticor Biotech. It trades about 0.06 of its potential returns per unit of risk. Acticor Biotech SAS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Acticor Biotech SAS on September 4, 2024 and sell it today you would lose (261.00) from holding Acticor Biotech SAS or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Vallourec vs. Acticor Biotech SAS
Performance |
| Timeline |
| Vallourec |
| Acticor Biotech SAS |
Vallourec and Acticor Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and Acticor Biotech
The main advantage of trading using opposite Vallourec and Acticor Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, Acticor Biotech 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 Acticor Biotech will offset losses from the drop in Acticor Biotech's long position.The idea behind Vallourec and Acticor Biotech SAS 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.| Acticor Biotech vs. Mauna Kea Technologies | Acticor Biotech vs. Innelec Multimedia | Acticor Biotech vs. Axway Software | Acticor Biotech vs. Fill Up Media |
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 CEOs Directory module to screen CEOs from public companies around the world.
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