Correlation Between Vallourec and Ekinops SA
Can any of the company-specific risk be diversified away by investing in both Vallourec and Ekinops SA 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 Ekinops SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and Ekinops SA, you can compare the effects of market volatilities on Vallourec and Ekinops SA 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 Ekinops SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Ekinops SA.
Diversification Opportunities for Vallourec and Ekinops SA
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vallourec and Ekinops is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Ekinops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekinops SA 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 Ekinops SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekinops SA has no effect on the direction of Vallourec i.e., Vallourec and Ekinops SA go up and down completely randomly.
Pair Corralation between Vallourec and Ekinops SA
Assuming the 90 days horizon Vallourec is expected to generate 1.08 times more return on investment than Ekinops SA. However, Vallourec is 1.08 times more volatile than Ekinops SA. It trades about 0.2 of its potential returns per unit of risk. Ekinops SA is currently generating about -0.27 per unit of risk. If you would invest 1,489 in Vallourec on September 4, 2024 and sell it today you would earn a total of 163.00 from holding Vallourec or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vallourec vs. Ekinops SA
Performance |
| Timeline |
| Vallourec |
| Ekinops SA |
Vallourec and Ekinops SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and Ekinops SA
The main advantage of trading using opposite Vallourec and Ekinops SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, Ekinops SA 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 Ekinops SA will offset losses from the drop in Ekinops SA's long position.The idea behind Vallourec and Ekinops 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.| Ekinops SA vs. Claranova SE | Ekinops SA vs. Derichebourg | Ekinops SA vs. Mersen SA | Ekinops SA vs. BigBen Interactive |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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