Correlation Between Superior Plus and ENGIE ADR1

Can any of the company-specific risk be diversified away by investing in both Superior Plus and ENGIE ADR1 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 ADR1 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 ADR1 EO, you can compare the effects of market volatilities on Superior Plus and ENGIE ADR1 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 ADR1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and ENGIE ADR1.

Diversification Opportunities for Superior Plus and ENGIE ADR1

0.55

Correlation Coefficient

Superior Plus  ENGIE ADR1

Very weak diversification

The 3 months correlation between Superior and ENGIE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ADR1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of Superior Plus i.e., Superior Plus and ENGIE ADR1 go up and down completely randomly.

Pair Corralation between Superior Plus and ENGIE ADR1

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the ENGIE ADR1. In addition to that, Superior Plus is 3.84 times more volatile than ENGIE ADR1 EO. It trades about -0.06 of its total potential returns per unit of risk. ENGIE ADR1 EO is currently generating about -0.11 per unit of volatility. If you would invest  1,560  in ENGIE ADR1 EO on September 21, 2024 and sell it today you would lose (100.00) from holding ENGIE ADR1 EO or give up 6.41% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  ENGIE ADR1 EO

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ENGIE ADR1 EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGIE ADR1 EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ENGIE ADR1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and ENGIE ADR1

The main advantage of trading using opposite Superior Plus and ENGIE ADR1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, ENGIE ADR1 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 ADR1 will offset losses from the drop in ENGIE ADR1's long position.

The idea behind Superior Plus Corp and ENGIE ADR1 EO 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.