Correlation Between Claranova and Believe SAS

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

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

Diversification Opportunities for Claranova and Believe SAS

0.46

Correlation Coefficient

Claranova  Believe SAS

Very weak diversification

The 3 months correlation between Claranova and Believe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Claranova SE and Believe SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Believe SAS and Claranova 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 Claranova SE are associated (or correlated) with Believe SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Believe SAS has no effect on the direction of Claranova i.e., Claranova and Believe SAS go up and down completely randomly.

Pair Corralation between Claranova and Believe SAS

Assuming the 90 days trading horizon Claranova SE is expected to under-perform the Believe SAS. In addition to that, Claranova is 1.95 times more volatile than Believe SAS. It trades about -0.18 of its total potential returns per unit of risk. Believe SAS is currently generating about -0.03 per unit of volatility. If you would invest  1,456  in Believe SAS on September 24, 2024 and sell it today you would lose (20.00) from holding Believe SAS or give up 1.37% of portfolio value over 90 days.

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

Claranova SE  vs.  Believe SAS

Claranova SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Claranova 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.

Believe SAS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Claranova and Believe SAS

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

The idea behind Claranova SE and Believe SAS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..