Correlation Between Renault Socit and X Fab

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

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

Diversification Opportunities for Renault Socit and X Fab

0.56

Correlation Coefficient

Renault Socit  X Fab

Very weak diversification

The 3 months correlation between Renault and XFAB is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Renault Socit Anonyme and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and Renault 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 Renault Socit Anonyme are associated (or correlated) with X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of Renault Socit i.e., Renault Socit and X Fab go up and down completely randomly.

Pair Corralation between Renault Socit and X Fab

Assuming the 90 days trading horizon Renault Socit Anonyme is expected to generate 0.34 times more return on investment than X Fab. However, Renault Socit Anonyme is 2.95 times less risky than X Fab. It trades about -0.12 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.06 per unit of risk. If you would invest  35,200  in Renault Socit Anonyme on September 3, 2024 and sell it today you would lose (2,814) from holding Renault Socit Anonyme or give up 7.99% of portfolio value over 90 days.

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

Renault Socit Anonyme  vs.  X Fab Silicon

Renault Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renault Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

X Fab Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Renault Socit and X Fab

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

The idea behind Renault Socit Anonyme and X Fab Silicon 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 Stocks Directory module to find actively traded stocks across global markets.