Correlation Between Veolia Environnement and BluMetric Environmental

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

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

Diversification Opportunities for Veolia Environnement and BluMetric Environmental

-0.65

Correlation Coefficient

Veolia Environnement  BluMetric Environmental

Excellent diversification

The 3 months correlation between Veolia and BluMetric is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and BluMetric Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BluMetric Environmental and Veolia Environnement 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 Veolia Environnement SA are associated (or correlated) with BluMetric Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BluMetric Environmental has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and BluMetric Environmental go up and down completely randomly.

Pair Corralation between Veolia Environnement and BluMetric Environmental

Assuming the 90 days horizon Veolia Environnement SA is expected to under-perform the BluMetric Environmental. But the pink sheet apears to be less risky and, when comparing its historical volatility, Veolia Environnement SA is 5.59 times less risky than BluMetric Environmental. The pink sheet trades about -0.15 of its potential returns per unit of risk. The BluMetric Environmental is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  34.00  in BluMetric Environmental on September 4, 2024 and sell it today you would earn a total of  25.00  from holding BluMetric Environmental or generate 73.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Veolia Environnement SA  vs.  BluMetric Environmental

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BluMetric Environmental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BluMetric Environmental are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BluMetric Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and BluMetric Environmental

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

The idea behind Veolia Environnement SA and BluMetric Environmental 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.