Correlation Between Idsud SA and GEA Grenobl

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

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

Diversification Opportunities for Idsud SA and GEA Grenobl

-0.01

Correlation Coefficient

Idsud SA  GEA Grenobl

Good diversification

The 3 months correlation between Idsud and GEA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Idsud SA and GEA Grenobl Elect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA Grenobl Elect and Idsud SA 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 Idsud SA are associated (or correlated) with GEA Grenobl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA Grenobl Elect has no effect on the direction of Idsud SA i.e., Idsud SA and GEA Grenobl go up and down completely randomly.

Pair Corralation between Idsud SA and GEA Grenobl

Assuming the 90 days trading horizon Idsud SA is expected to generate 0.76 times more return on investment than GEA Grenobl. However, Idsud SA is 1.32 times less risky than GEA Grenobl. It trades about 0.11 of its potential returns per unit of risk. GEA Grenobl Elect is currently generating about -0.04 per unit of risk. If you would invest  17,300  in Idsud SA on September 4, 2024 and sell it today you would earn a total of  1,740  from holding Idsud SA or generate 10.06% return on investment over 90 days.

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

Idsud SA  vs.  GEA Grenobl Elect

Idsud SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idsud SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Idsud SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GEA Grenobl Elect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEA Grenobl Elect has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GEA Grenobl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Idsud SA and GEA Grenobl

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

The idea behind Idsud SA and GEA Grenobl Elect 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.