Correlation Between Hydrogene and Grolleau SAS

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

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

Diversification Opportunities for Hydrogene and Grolleau SAS

0.69

Correlation Coefficient

Hydrogene  Grolleau SAS

Poor diversification

The 3 months correlation between Hydrogene and Grolleau is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogene De France and Grolleau SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grolleau SAS and Hydrogene 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 Hydrogene De France are associated (or correlated) with Grolleau SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grolleau SAS has no effect on the direction of Hydrogene i.e., Hydrogene and Grolleau SAS go up and down completely randomly.

Pair Corralation between Hydrogene and Grolleau SAS

Assuming the 90 days trading horizon Hydrogene De France is expected to under-perform the Grolleau SAS. But the stock apears to be less risky and, when comparing its historical volatility, Hydrogene De France is 1.2 times less risky than Grolleau SAS. The stock trades about -0.36 of its potential returns per unit of risk. The Grolleau SAS is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  540.00  in Grolleau SAS on September 3, 2024 and sell it today you would lose (122.00) from holding Grolleau SAS or give up 22.59% of portfolio value over 90 days.

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

Hydrogene De France  vs.  Grolleau SAS

Hydrogene De France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrogene De France 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 technical and fundamental 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.

Grolleau SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grolleau SAS 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.

Pair Trading with Hydrogene and Grolleau SAS

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

The idea behind Hydrogene De France and Grolleau 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.