Correlation Between Veolia Environnement and Greenshift Corp

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

Diversification Opportunities for Veolia Environnement and Greenshift Corp

-0.29

Correlation Coefficient

Veolia Environnement  Greenshift Corp

Very good diversification

The 3 months correlation between Veolia and Greenshift is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and Greenshift Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenshift Corp 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 Greenshift Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenshift Corp has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Greenshift Corp go up and down completely randomly.

Pair Corralation between Veolia Environnement and Greenshift Corp

Assuming the 90 days horizon Veolia Environnement SA is expected to under-perform the Greenshift Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Veolia Environnement SA is 4.34 times less risky than Greenshift Corp. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Greenshift Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  4.39  in Greenshift Corp on January 26, 2024 and sell it today you would earn a total of  2.00  from holding Greenshift Corp or generate 45.56% return on investment over 90 days.

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

Veolia Environnement SA  vs.  Greenshift Corp

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Veolia Environnement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Greenshift Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenshift Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Greenshift Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and Greenshift Corp

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

The idea behind Veolia Environnement SA and Greenshift Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.