Correlation Between Europlasma and Groupe Sfpi

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

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

Diversification Opportunities for Europlasma and Groupe Sfpi

-0.55

Correlation Coefficient

Europlasma  Groupe Sfpi

Excellent diversification

The 3 months correlation between Europlasma and Groupe is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Groupe Sfpi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Sfpi and Europlasma 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 Europlasma SA are associated (or correlated) with Groupe Sfpi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Sfpi has no effect on the direction of Europlasma i.e., Europlasma and Groupe Sfpi go up and down completely randomly.

Pair Corralation between Europlasma and Groupe Sfpi

Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Groupe Sfpi. In addition to that, Europlasma is 2.37 times more volatile than Groupe Sfpi. It trades about -0.82 of its total potential returns per unit of risk. Groupe Sfpi is currently generating about -0.08 per unit of volatility. If you would invest  205.00  in Groupe Sfpi on August 29, 2024 and sell it today you would lose (8.00) from holding Groupe Sfpi or give up 3.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Europlasma SA  vs.  Groupe Sfpi

Europlasma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europlasma 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Groupe Sfpi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Europlasma and Groupe Sfpi

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

The idea behind Europlasma SA and Groupe Sfpi 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.