Correlation Between Eurofins Scientific and Worldline

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

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

Diversification Opportunities for Eurofins Scientific and Worldline

-0.25

Correlation Coefficient

Eurofins Scientific  Worldline

Very good diversification

The 3 months correlation between Eurofins and Worldline is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eurofins Scientific SE and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA and Eurofins Scientific 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 Eurofins Scientific SE are associated (or correlated) with Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Eurofins Scientific i.e., Eurofins Scientific and Worldline go up and down completely randomly.

Pair Corralation between Eurofins Scientific and Worldline

Assuming the 90 days trading horizon Eurofins Scientific SE is expected to under-perform the Worldline. But the stock apears to be less risky and, when comparing its historical volatility, Eurofins Scientific SE is 1.91 times less risky than Worldline. The stock trades about -0.07 of its potential returns per unit of risk. The Worldline SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  623.00  in Worldline SA on September 24, 2024 and sell it today you would earn a total of  174.00  from holding Worldline SA or generate 27.93% return on investment over 90 days.

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

Eurofins Scientific SE  vs.  Worldline SA

Eurofins Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

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

Worldline SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldline sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurofins Scientific and Worldline

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

The idea behind Eurofins Scientific SE and Worldline 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.