Correlation Between Wendel and Socit Des

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

By analyzing existing cross correlation between Wendel and Socit des Chemins, you can compare the effects of market volatilities on Wendel and Socit Des 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 Wendel with a short position of Socit Des. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendel and Socit Des.

Diversification Opportunities for Wendel and Socit Des

0.44

Correlation Coefficient

Wendel  Socit Des

Very weak diversification

The 3 months correlation between Wendel and Socit is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Socit des Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit des Chemins and Wendel 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 Wendel are associated (or correlated) with Socit Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit des Chemins has no effect on the direction of Wendel i.e., Wendel and Socit Des go up and down completely randomly.

Pair Corralation between Wendel and Socit Des

Assuming the 90 days horizon Wendel is expected to generate 11.84 times less return on investment than Socit Des. But when comparing it to its historical volatility, Wendel is 4.47 times less risky than Socit Des. It trades about 0.06 of its potential returns per unit of risk. Socit des Chemins is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  795,000  in Socit des Chemins on September 2, 2024 and sell it today you would earn a total of  255,000  from holding Socit des Chemins or generate 32.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	74.24%
Values	Daily Returns

Wendel  vs.  Socit des Chemins

Wendel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wendel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wendel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Socit des Chemins

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Socit des Chemins has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Socit Des reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wendel and Socit Des

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

The idea behind Wendel and Socit des Chemins 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.