Correlation Between Worldline and OVH Groupe

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

By analyzing existing cross correlation between Worldline SA and OVH Groupe SAS, you can compare the effects of market volatilities on Worldline and OVH Groupe 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 OVH Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldline and OVH Groupe.

Diversification Opportunities for Worldline and OVH Groupe

-0.44

Correlation Coefficient

Worldline  OVH Groupe

Very good diversification

The 3 months correlation between Worldline and OVH is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Worldline SA and OVH Groupe SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVH Groupe SAS 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 OVH Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVH Groupe SAS has no effect on the direction of Worldline i.e., Worldline and OVH Groupe go up and down completely randomly.

Pair Corralation between Worldline and OVH Groupe

Assuming the 90 days trading horizon Worldline SA is expected to generate 4.8 times more return on investment than OVH Groupe. However, Worldline is 4.8 times more volatile than OVH Groupe SAS. It trades about 0.08 of its potential returns per unit of risk. OVH Groupe SAS is currently generating about -0.09 per unit of risk. If you would invest  640.00  in Worldline SA on September 4, 2024 and sell it today you would earn a total of  39.00  from holding Worldline SA or generate 6.09% return on investment over 90 days.

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

Worldline SA  vs.  OVH Groupe SAS

Worldline SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

OVH Groupe SAS

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OVH Groupe SAS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, OVH Groupe sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worldline and OVH Groupe

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

The idea behind Worldline SA and OVH Groupe SAS 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.

Check out your portfolio center.

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.