Correlation Between Neoen SA and Entech SE

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

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

Diversification Opportunities for Neoen SA and Entech SE

-0.66

Correlation Coefficient

Neoen SA  Entech SE

Excellent diversification

The 3 months correlation between Neoen and Entech is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Neoen SA 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 Neoen SA are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Neoen SA i.e., Neoen SA and Entech SE go up and down completely randomly.

Pair Corralation between Neoen SA and Entech SE

Assuming the 90 days trading horizon Neoen SA is expected to generate 0.05 times more return on investment than Entech SE. However, Neoen SA is 21.17 times less risky than Entech SE. It trades about 0.11 of its potential returns per unit of risk. Entech SE SAS is currently generating about -0.03 per unit of risk. If you would invest  3,900  in Neoen SA on September 28, 2024 and sell it today you would earn a total of  54.00  from holding Neoen SA or generate 1.38% return on investment over 90 days.

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

Neoen SA  vs.  Entech SE SAS

Neoen SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Neoen SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Neoen SA and Entech SE

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

The idea behind Neoen SA and Entech SE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.