Correlation Between Veolia Environnement and Young Cos

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

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

Diversification Opportunities for Veolia Environnement and Young Cos

-0.28

Correlation Coefficient

Veolia Environnement  Young Cos

Very good diversification

The 3 months correlation between Veolia and Young is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery and Veolia Environnement 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 Veolia Environnement VE are associated (or correlated) with Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Young Cos go up and down completely randomly.

Pair Corralation between Veolia Environnement and Young Cos

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Young Cos. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.13 times less risky than Young Cos. The stock trades about -0.1 of its potential returns per unit of risk. The Young Cos Brewery is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  64,025  in Young Cos Brewery on September 2, 2024 and sell it today you would lose (225.00) from holding Young Cos Brewery or give up 0.35% of portfolio value over 90 days.

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

Veolia Environnement VE  vs.  Young Cos Brewery

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Young Cos Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Young Cos Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Young Cos 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 Veolia Environnement and Young Cos

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

The idea behind Veolia Environnement VE and Young Cos Brewery 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.