Correlation Between Rubis SCA and Vergnet

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

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

Diversification Opportunities for Rubis SCA and Vergnet

0.47

Correlation Coefficient

Rubis SCA  Vergnet

Very weak diversification

The 3 months correlation between Rubis and Vergnet is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA and Vergnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vergnet and Rubis SCA 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 Rubis SCA are associated (or correlated) with Vergnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vergnet has no effect on the direction of Rubis SCA i.e., Rubis SCA and Vergnet go up and down completely randomly.

Pair Corralation between Rubis SCA and Vergnet

Assuming the 90 days trading horizon Rubis SCA is expected to generate 0.19 times more return on investment than Vergnet. However, Rubis SCA is 5.14 times less risky than Vergnet. It trades about -0.01 of its potential returns per unit of risk. Vergnet is currently generating about -0.4 per unit of risk. If you would invest  2,304  in Rubis SCA on September 24, 2024 and sell it today you would lose (8.00) from holding Rubis SCA or give up 0.35% of portfolio value over 90 days.

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

Rubis SCA  vs.  Vergnet

Rubis SCA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vergnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vergnet 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 Rubis SCA and Vergnet

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

The idea behind Rubis SCA and Vergnet 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.