Correlation Between Jacquet Metal and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both Jacquet Metal and Veolia Environnement 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 Jacquet Metal and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacquet Metal Service and Veolia Environnement VE, you can compare the effects of market volatilities on Jacquet Metal and Veolia Environnement 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 Jacquet Metal with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and Veolia Environnement.

Diversification Opportunities for Jacquet Metal and Veolia Environnement

-0.04

Correlation Coefficient

Jacquet Metal  Veolia Environnement

Good diversification

The 3 months correlation between Jacquet and Veolia is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and Veolia Environnement go up and down completely randomly.

Pair Corralation between Jacquet Metal and Veolia Environnement

Assuming the 90 days trading horizon Jacquet Metal is expected to generate 1.4 times less return on investment than Veolia Environnement. In addition to that, Jacquet Metal is 1.47 times more volatile than Veolia Environnement VE. It trades about 0.02 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.05 per unit of volatility. If you would invest  2,232  in Veolia Environnement VE on September 14, 2024 and sell it today you would earn a total of  571.00  from holding Veolia Environnement VE or generate 25.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jacquet Metal Service  vs.  Veolia Environnement VE

Jacquet Metal Service

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Jacquet Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Veolia Environnement is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jacquet Metal and Veolia Environnement

The main advantage of trading using opposite Jacquet Metal and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacquet Metal position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.

The idea behind Jacquet Metal Service and Veolia Environnement VE 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.