Correlation Between Moulinvest and Groupimo

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

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

Diversification Opportunities for Moulinvest and Groupimo

-0.42

Correlation Coefficient

Moulinvest  Groupimo

Very good diversification

The 3 months correlation between Moulinvest and Groupimo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Moulinvest and Groupimo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupimo SA and Moulinvest 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 Moulinvest are associated (or correlated) with Groupimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupimo SA has no effect on the direction of Moulinvest i.e., Moulinvest and Groupimo go up and down completely randomly.

Pair Corralation between Moulinvest and Groupimo

Assuming the 90 days trading horizon Moulinvest is expected to under-perform the Groupimo. But the stock apears to be less risky and, when comparing its historical volatility, Moulinvest is 7.61 times less risky than Groupimo. The stock trades about -0.18 of its potential returns per unit of risk. The Groupimo SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Groupimo SA on September 5, 2024 and sell it today you would lose (1.00) from holding Groupimo SA or give up 5.0% of portfolio value over 90 days.

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

Moulinvest  vs.  Groupimo SA

Moulinvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moulinvest has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Groupimo SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Groupimo SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupimo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moulinvest and Groupimo

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

The idea behind Moulinvest and Groupimo 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.