Correlation Between Energisme and Dassault Systemes

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

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

Diversification Opportunities for Energisme and Dassault Systemes

-0.57

Correlation Coefficient

Energisme  Dassault Systemes

Excellent diversification

The 3 months correlation between Energisme and Dassault is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Energisme and Dassault Systemes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systemes and Energisme 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 Energisme are associated (or correlated) with Dassault Systemes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systemes has no effect on the direction of Energisme i.e., Energisme and Dassault Systemes go up and down completely randomly.

Pair Corralation between Energisme and Dassault Systemes

Assuming the 90 days trading horizon Energisme is expected to generate 3.06 times more return on investment than Dassault Systemes. However, Energisme is 3.06 times more volatile than Dassault Systemes SE. It trades about 0.02 of its potential returns per unit of risk. Dassault Systemes SE is currently generating about -0.07 per unit of risk. If you would invest  0.56  in Energisme on September 25, 2024 and sell it today you would lose (0.01) from holding Energisme or give up 1.79% of portfolio value over 90 days.

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

Energisme  vs.  Dassault Systemes SE

Energisme

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisme are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Energisme is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Dassault Systemes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systemes SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Energisme and Dassault Systemes

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

The idea behind Energisme and Dassault Systemes SE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.