Correlation Between Gaussin and Worldline

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

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

Diversification Opportunities for Gaussin and Worldline

0.11

Correlation Coefficient

Gaussin  Worldline

Average diversification

The 3 months correlation between Gaussin and Worldline is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gaussin and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA and Gaussin 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 Gaussin are associated (or correlated) with Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Gaussin i.e., Gaussin and Worldline go up and down completely randomly.

Pair Corralation between Gaussin and Worldline

Assuming the 90 days trading horizon Gaussin is expected to under-perform the Worldline. In addition to that, Gaussin is 2.84 times more volatile than Worldline SA. It trades about -0.02 of its total potential returns per unit of risk. Worldline SA is currently generating about -0.05 per unit of volatility. If you would invest  3,743  in Worldline SA on September 24, 2024 and sell it today you would lose (2,946) from holding Worldline SA or give up 78.71% of portfolio value over 90 days.

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

Gaussin  vs.  Worldline SA

Gaussin

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaussin are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gaussin reported solid returns over the last few months and may actually be approaching a breakup point.

Worldline SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldline sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaussin and Worldline

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

The idea behind Gaussin and Worldline 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.