Correlation Between Worldline and Eurofins Scientific

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

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

Diversification Opportunities for Worldline and Eurofins Scientific

-0.25

Correlation Coefficient

Worldline  Eurofins Scientific

Very good diversification

The 3 months correlation between Worldline and Eurofins is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Worldline SA and Eurofins Scientific SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurofins Scientific and Worldline 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 Worldline SA are associated (or correlated) with Eurofins Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurofins Scientific has no effect on the direction of Worldline i.e., Worldline and Eurofins Scientific go up and down completely randomly.

Pair Corralation between Worldline and Eurofins Scientific

Assuming the 90 days trading horizon Worldline SA is expected to generate 1.91 times more return on investment than Eurofins Scientific. However, Worldline is 1.91 times more volatile than Eurofins Scientific SE. It trades about 0.12 of its potential returns per unit of risk. Eurofins Scientific SE is currently generating about -0.07 per unit of risk. If you would invest  623.00  in Worldline SA on September 24, 2024 and sell it today you would earn a total of  174.00  from holding Worldline SA or generate 27.93% return on investment over 90 days.

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

Worldline SA  vs.  Eurofins Scientific SE

Worldline SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldline sustained solid returns over the last few months and may actually be approaching a breakup point.

Eurofins Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurofins Scientific SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with Worldline and Eurofins Scientific

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

The idea behind Worldline SA and Eurofins Scientific SE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.