Correlation Between Renault SA and Crossject

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

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

Diversification Opportunities for Renault SA and Crossject

-0.46

Correlation Coefficient

Renault SA  Crossject

Very good diversification

The 3 months correlation between Renault and Crossject is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Crossject in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossject and Renault 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 Renault SA are associated (or correlated) with Crossject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossject has no effect on the direction of Renault SA i.e., Renault SA and Crossject go up and down completely randomly.

Pair Corralation between Renault SA and Crossject

Assuming the 90 days trading horizon Renault SA is expected to generate 0.59 times more return on investment than Crossject. However, Renault SA is 1.69 times less risky than Crossject. It trades about 0.15 of its potential returns per unit of risk. Crossject is currently generating about -0.05 per unit of risk. If you would invest  3,943  in Renault SA on September 24, 2024 and sell it today you would earn a total of  739.00  from holding Renault SA or generate 18.74% return on investment over 90 days.

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

Renault SA  vs.  Crossject

Renault SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renault SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renault SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Crossject

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crossject 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 SA and Crossject

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

The idea behind Renault SA and Crossject 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.