Correlation Between Superior Plus and Engie SA

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Engie 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 Superior Plus and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Engie SA, you can compare the effects of market volatilities on Superior Plus and Engie 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 Superior Plus with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Engie SA.

Diversification Opportunities for Superior Plus and Engie SA

0.6

Correlation Coefficient

Superior Plus  Engie SA

Poor diversification

The 3 months correlation between Superior and Engie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Superior Plus i.e., Superior Plus and Engie SA go up and down completely randomly.

Pair Corralation between Superior Plus and Engie SA

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Engie SA. In addition to that, Superior Plus is 3.49 times more volatile than Engie SA. It trades about -0.06 of its total potential returns per unit of risk. Engie SA is currently generating about -0.09 per unit of volatility. If you would invest  1,573  in Engie SA on September 21, 2024 and sell it today you would lose (87.00) from holding Engie SA or give up 5.53% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  Engie SA

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Engie SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and Engie SA

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

The idea behind Superior Plus Corp and Engie 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..