Correlation Between Vallourec and GECI International
Can any of the company-specific risk be diversified away by investing in both Vallourec and GECI International 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 GECI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and GECI International SA, you can compare the effects of market volatilities on Vallourec and GECI International 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 GECI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and GECI International.
Diversification Opportunities for Vallourec and GECI International
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vallourec and GECI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and GECI International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GECI International 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 GECI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GECI International has no effect on the direction of Vallourec i.e., Vallourec and GECI International go up and down completely randomly.
Pair Corralation between Vallourec and GECI International
Assuming the 90 days horizon Vallourec is expected to generate 0.58 times more return on investment than GECI International. However, Vallourec is 1.73 times less risky than GECI International. It trades about 0.17 of its potential returns per unit of risk. GECI International SA is currently generating about -0.13 per unit of risk. If you would invest 1,489 in Vallourec on November 2, 2024 and sell it today you would earn a total of 326.00 from holding Vallourec or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vallourec vs. GECI International SA
Performance |
| Timeline |
| Vallourec |
| GECI International |
Vallourec and GECI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and GECI International
The main advantage of trading using opposite Vallourec and GECI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, GECI International 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 GECI International will offset losses from the drop in GECI International's long position.The idea behind Vallourec and GECI International SA 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.| GECI International vs. Europlasma SA | GECI International vs. Archos | GECI International vs. Auplata SA | GECI International vs. DBT 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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