Correlation Between Vicat SA and Methanor

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

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

Diversification Opportunities for Vicat SA and Methanor

-0.57

Correlation Coefficient

Vicat SA  Methanor

Excellent diversification

The 3 months correlation between Vicat and Methanor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Vicat 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 Vicat SA are associated (or correlated) with Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Vicat SA i.e., Vicat SA and Methanor go up and down completely randomly.

Pair Corralation between Vicat SA and Methanor

Assuming the 90 days trading horizon Vicat SA is expected to generate 0.38 times more return on investment than Methanor. However, Vicat SA is 2.65 times less risky than Methanor. It trades about 0.07 of its potential returns per unit of risk. Methanor is currently generating about -0.07 per unit of risk. If you would invest  3,420  in Vicat SA on September 25, 2024 and sell it today you would earn a total of  200.00  from holding Vicat SA or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Vicat SA  vs.  Methanor

Vicat SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vicat SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Methanor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methanor 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 Vicat SA and Methanor

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

The idea behind Vicat SA and Methanor 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.