Correlation Between Avenir Telecom and Engie SA

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

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

Diversification Opportunities for Avenir Telecom and Engie SA

0.76

Correlation Coefficient

Avenir Telecom  Engie SA

Poor diversification

The 3 months correlation between Avenir and Engie is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avenir Telecom SA and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA and Avenir Telecom 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 Avenir Telecom SA are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Avenir Telecom i.e., Avenir Telecom and Engie SA go up and down completely randomly.

Pair Corralation between Avenir Telecom and Engie SA

Assuming the 90 days trading horizon Avenir Telecom SA is expected to under-perform the Engie SA. In addition to that, Avenir Telecom is 2.77 times more volatile than Engie SA. It trades about -0.21 of its total potential returns per unit of risk. Engie SA is currently generating about -0.06 per unit of volatility. If you would invest  1,518  in Engie SA on September 25, 2024 and sell it today you would lose (19.00) from holding Engie SA or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Avenir Telecom SA  vs.  Engie SA

Avenir Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avenir Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Avenir Telecom and Engie SA

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

The idea behind Avenir Telecom SA and Engie 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.