Correlation Between Rexel SA and Vallourec

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

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

Diversification Opportunities for Rexel SA and Vallourec

0.75

Correlation Coefficient

Rexel SA  Vallourec

Poor diversification

The 3 months correlation between Rexel and Vallourec is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rexel SA and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec and Rexel 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 Rexel SA are associated (or correlated) with Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Rexel SA i.e., Rexel SA and Vallourec go up and down completely randomly.

Pair Corralation between Rexel SA and Vallourec

Assuming the 90 days trading horizon Rexel SA is expected to generate 0.89 times more return on investment than Vallourec. However, Rexel SA is 1.12 times less risky than Vallourec. It trades about 0.21 of its potential returns per unit of risk. Vallourec is currently generating about 0.13 per unit of risk. If you would invest  2,222  in Rexel SA on April 25, 2025 and sell it today you would earn a total of  462.00  from holding Rexel SA or generate 20.79% return on investment over 90 days.

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

Rexel SA  vs.  Vallourec

Rexel SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rexel SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Rexel SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Vallourec

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vallourec are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vallourec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rexel SA and Vallourec

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

The idea behind Rexel SA and Vallourec 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.