Correlation Between Passat Socit and Smcp SAS

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

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

Diversification Opportunities for Passat Socit and Smcp SAS

-0.29

Correlation Coefficient

Passat Socit  Smcp SAS

Very good diversification

The 3 months correlation between Passat and Smcp is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Passat Socit Anonyme and Smcp SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smcp SAS and Passat Socit 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 Passat Socit Anonyme are associated (or correlated) with Smcp SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smcp SAS has no effect on the direction of Passat Socit i.e., Passat Socit and Smcp SAS go up and down completely randomly.

Pair Corralation between Passat Socit and Smcp SAS

Assuming the 90 days trading horizon Passat Socit is expected to generate 8.48 times less return on investment than Smcp SAS. But when comparing it to its historical volatility, Passat Socit Anonyme is 1.69 times less risky than Smcp SAS. It trades about 0.05 of its potential returns per unit of risk. Smcp SAS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  297.00  in Smcp SAS on September 25, 2024 and sell it today you would earn a total of  52.00  from holding Smcp SAS or generate 17.51% return on investment over 90 days.

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

Passat Socit Anonyme  vs.  Smcp SAS

Passat Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Passat Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Passat Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smcp SAS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Passat Socit and Smcp SAS

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

The idea behind Passat Socit Anonyme and Smcp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.