Correlation Between Vallourec and Soitec SA
Can any of the company-specific risk be diversified away by investing in both Vallourec and Soitec 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 Soitec SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and Soitec SA, you can compare the effects of market volatilities on Vallourec and Soitec 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 Soitec SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Soitec SA.
Diversification Opportunities for Vallourec and Soitec SA
Pay attention - limited upside
The 3 months correlation between Vallourec and Soitec is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Soitec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soitec 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 Soitec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soitec SA has no effect on the direction of Vallourec i.e., Vallourec and Soitec SA go up and down completely randomly.
Pair Corralation between Vallourec and Soitec SA
Assuming the 90 days horizon Vallourec is expected to generate 0.73 times more return on investment than Soitec SA. However, Vallourec is 1.37 times less risky than Soitec SA. It trades about 0.31 of its potential returns per unit of risk. Soitec SA is currently generating about -0.05 per unit of risk. If you would invest 1,412 in Vallourec on August 27, 2024 and sell it today you would earn a total of 247.00 from holding Vallourec or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vallourec vs. Soitec SA
Performance |
| Timeline |
| Vallourec |
| Soitec SA |
Vallourec and Soitec SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and Soitec SA
The main advantage of trading using opposite Vallourec and Soitec SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, Soitec 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 Soitec SA will offset losses from the drop in Soitec SA's long position.| Vallourec vs. Alstom SA | Vallourec vs. Compagnie de Saint Gobain | Vallourec vs. Bouygues SA | Vallourec vs. Manitou BF SA |
| Soitec SA vs. Kalray SA | Soitec SA vs. Lacroix Group SA | Soitec SA vs. Ekinops SA | Soitec SA vs. Plastiques du Val |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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