Correlation Between Voltalia and Methanor

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

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

Diversification Opportunities for Voltalia and Methanor

0.76

Correlation Coefficient

Voltalia  Methanor

Poor diversification

The 3 months correlation between Voltalia and Methanor is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Voltalia SA and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Voltalia 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 Voltalia 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 Voltalia i.e., Voltalia and Methanor go up and down completely randomly.

Pair Corralation between Voltalia and Methanor

Assuming the 90 days trading horizon Voltalia SA is expected to under-perform the Methanor. But the stock apears to be less risky and, when comparing its historical volatility, Voltalia SA is 1.03 times less risky than Methanor. The stock trades about -0.17 of its potential returns per unit of risk. The Methanor is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  178.00  in Methanor on September 24, 2024 and sell it today you would lose (8.00) from holding Methanor or give up 4.49% of portfolio value over 90 days.

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

Voltalia SA  vs.  Methanor

Voltalia SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltalia SA 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.

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 Voltalia and Methanor

The main advantage of trading using opposite Voltalia and Methanor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltalia 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 Voltalia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.