Correlation Between Neoen SA and Lucibel

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

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

Diversification Opportunities for Neoen SA and Lucibel

-0.79

Correlation Coefficient

Neoen SA  Lucibel

Pay attention - limited upside

The 3 months correlation between Neoen and Lucibel is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and Lucibel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucibel 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 Lucibel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucibel has no effect on the direction of Neoen SA i.e., Neoen SA and Lucibel go up and down completely randomly.

Pair Corralation between Neoen SA and Lucibel

Assuming the 90 days trading horizon Neoen SA is expected to generate 0.03 times more return on investment than Lucibel. However, Neoen SA is 32.31 times less risky than Lucibel. It trades about 0.13 of its potential returns per unit of risk. Lucibel is currently generating about -0.1 per unit of risk. If you would invest  3,886  in Neoen SA on September 27, 2024 and sell it today you would earn a total of  68.00  from holding Neoen SA or generate 1.75% 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.  Lucibel

Neoen SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 10 (%) 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.

Lucibel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucibel 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 Neoen SA and Lucibel

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

The idea behind Neoen SA and Lucibel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.