Correlation Between Veolia Environnement and DevEx Resources

Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and DevEx Resources 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 DevEx Resources 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 DevEx Resources Limited, you can compare the effects of market volatilities on Veolia Environnement and DevEx Resources 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 DevEx Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and DevEx Resources.

Diversification Opportunities for Veolia Environnement and DevEx Resources

0.13

Correlation Coefficient

Veolia Environnement  DevEx Resources

Average diversification

The 3 months correlation between Veolia and DevEx is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and DevEx Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevEx Resources 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 DevEx Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevEx Resources has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and DevEx Resources go up and down completely randomly.

Pair Corralation between Veolia Environnement and DevEx Resources

Assuming the 90 days horizon Veolia Environnement SA is expected to under-perform the DevEx Resources. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement SA is 19.96 times less risky than DevEx Resources. The stock trades about -0.06 of its potential returns per unit of risk. The DevEx Resources Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.90  in DevEx Resources Limited on May 4, 2025 and sell it today you would lose (0.20) from holding DevEx Resources Limited or give up 6.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Veolia Environnement SA  vs.  DevEx Resources Limited

Veolia Environnement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Veolia Environnement is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DevEx Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and DevEx Resources

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

The idea behind Veolia Environnement SA and DevEx Resources Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.