Correlation Between Voltalia and Hydrogene
Can any of the company-specific risk be diversified away by investing in both Voltalia and Hydrogene 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 Voltalia and Hydrogene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voltalia SA and Hydrogene De France, you can compare the effects of market volatilities on Voltalia and Hydrogene 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 Voltalia with a short position of Hydrogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltalia and Hydrogene.
Diversification Opportunities for Voltalia and Hydrogene
Average diversification
The 3 months correlation between Voltalia and Hydrogene is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Voltalia SA and Hydrogene De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrogene De France and Voltalia 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 Voltalia SA are associated (or correlated) with Hydrogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrogene De France has no effect on the direction of Voltalia i.e., Voltalia and Hydrogene go up and down completely randomly.
Pair Corralation between Voltalia and Hydrogene
Assuming the 90 days trading horizon Voltalia SA is expected to generate 1.27 times more return on investment than Hydrogene. However, Voltalia is 1.27 times more volatile than Hydrogene De France. It trades about -0.04 of its potential returns per unit of risk. Hydrogene De France is currently generating about -0.13 per unit of risk. If you would invest 1,648 in Voltalia SA on September 2, 2024 and sell it today you would lose (880.00) from holding Voltalia SA or give up 53.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voltalia SA vs. Hydrogene De France
Performance |
| Timeline |
| Voltalia SA |
| Hydrogene De France |
Voltalia and Hydrogene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voltalia and Hydrogene
The main advantage of trading using opposite Voltalia and Hydrogene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltalia position performs unexpectedly, Hydrogene 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 Hydrogene will offset losses from the drop in Hydrogene's long position.The idea behind Voltalia SA and Hydrogene De France 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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