Correlation Between Vallourec and Solocal Group
Can any of the company-specific risk be diversified away by investing in both Vallourec and Solocal Group 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 Solocal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and Solocal Group SA, you can compare the effects of market volatilities on Vallourec and Solocal Group 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 Solocal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Solocal Group.
Diversification Opportunities for Vallourec and Solocal Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vallourec and Solocal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group 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 Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Vallourec i.e., Vallourec and Solocal Group go up and down completely randomly.
Pair Corralation between Vallourec and Solocal Group
Assuming the 90 days horizon Vallourec is expected to generate 13.26 times less return on investment than Solocal Group. But when comparing it to its historical volatility, Vallourec is 30.19 times less risky than Solocal Group. It trades about 0.09 of its potential returns per unit of risk. Solocal Group SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 800.00 in Solocal Group SA on August 29, 2024 and sell it today you would lose (520.00) from holding Solocal Group SA or give up 65.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Vallourec vs. Solocal Group SA
Performance |
| Timeline |
| Vallourec |
| Solocal Group SA |
Vallourec and Solocal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and Solocal Group
The main advantage of trading using opposite Vallourec and Solocal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, Solocal Group 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 Solocal Group will offset losses from the drop in Solocal Group's long position.The idea behind Vallourec and Solocal Group 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.| Solocal Group vs. Manitou BF SA | Solocal Group vs. Ossiam Minimum Variance | Solocal Group vs. Ekinops SA | Solocal Group vs. Orapi 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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