Correlation Between Imerys SA and Rubis SCA

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

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

Diversification Opportunities for Imerys SA and Rubis SCA

0.34

Correlation Coefficient

Imerys SA  Rubis SCA

Weak diversification

The 3 months correlation between Imerys and Rubis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Imerys SA and Rubis SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubis SCA and Imerys SA 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 Imerys SA are associated (or correlated) with Rubis SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubis SCA has no effect on the direction of Imerys SA i.e., Imerys SA and Rubis SCA go up and down completely randomly.

Pair Corralation between Imerys SA and Rubis SCA

Assuming the 90 days horizon Imerys SA is expected to generate 1.45 times more return on investment than Rubis SCA. However, Imerys SA is 1.45 times more volatile than Rubis SCA. It trades about 0.43 of its potential returns per unit of risk. Rubis SCA is currently generating about 0.21 per unit of risk. If you would invest  3,379  in Imerys SA on March 11, 2024 and sell it today you would earn a total of  421.00  from holding Imerys SA or generate 12.46% return on investment over 90 days.

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

Imerys SA  vs.  Rubis SCA

Imerys SA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Imerys SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imerys SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Rubis SCA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Rubis SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imerys SA and Rubis SCA

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

The idea behind Imerys SA and Rubis SCA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.