Correlation Between Prodways Group and Adeunis

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

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

Diversification Opportunities for Prodways Group and Adeunis

-0.19

Correlation Coefficient

Prodways Group  Adeunis

Good diversification

The 3 months correlation between Prodways and Adeunis is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Adeunis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adeunis and Prodways Group 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 Prodways Group SA are associated (or correlated) with Adeunis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adeunis has no effect on the direction of Prodways Group i.e., Prodways Group and Adeunis go up and down completely randomly.

Pair Corralation between Prodways Group and Adeunis

Assuming the 90 days trading horizon Prodways Group is expected to generate 437.37 times less return on investment than Adeunis. But when comparing it to its historical volatility, Prodways Group SA is 3.0 times less risky than Adeunis. It trades about 0.0 of its potential returns per unit of risk. Adeunis is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Adeunis on September 26, 2024 and sell it today you would earn a total of  15.00  from holding Adeunis or generate 20.55% return on investment over 90 days.

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

Prodways Group SA  vs.  Adeunis

Prodways Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Adeunis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adeunis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adeunis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prodways Group and Adeunis

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

The idea behind Prodways Group SA and Adeunis 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.