Correlation Between Compagnie Des and Selectirente

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

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

Diversification Opportunities for Compagnie Des and Selectirente

-0.81

Correlation Coefficient

Compagnie Des  Selectirente

Pay attention - limited upside

The 3 months correlation between Compagnie and Selectirente is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Eaux and Selectirente in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selectirente and Compagnie Des 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 Compagnie des Eaux are associated (or correlated) with Selectirente. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selectirente has no effect on the direction of Compagnie Des i.e., Compagnie Des and Selectirente go up and down completely randomly.

Pair Corralation between Compagnie Des and Selectirente

Assuming the 90 days trading horizon Compagnie des Eaux is expected to generate 5.19 times more return on investment than Selectirente. However, Compagnie Des is 5.19 times more volatile than Selectirente. It trades about 0.12 of its potential returns per unit of risk. Selectirente is currently generating about -0.33 per unit of risk. If you would invest  4,740  in Compagnie des Eaux on September 16, 2024 and sell it today you would earn a total of  240.00  from holding Compagnie des Eaux or generate 5.06% return on investment over 90 days.

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

Compagnie des Eaux  vs.  Selectirente

Compagnie des Eaux

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie des Eaux 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.

Selectirente

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selectirente has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Selectirente is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compagnie Des and Selectirente

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

The idea behind Compagnie des Eaux and Selectirente 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.