Correlation Between Veolia Environnement and NTT DATA

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

Diversification Opportunities for Veolia Environnement and NTT DATA

0.36

Correlation Coefficient

Veolia Environnement  NTT DATA

Weak diversification

The 3 months correlation between Veolia and NTT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and NTT DATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT DATA 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 NTT DATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT DATA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and NTT DATA go up and down completely randomly.

Pair Corralation between Veolia Environnement and NTT DATA

Assuming the 90 days horizon Veolia Environnement is expected to generate 20.4 times less return on investment than NTT DATA. But when comparing it to its historical volatility, Veolia Environnement SA is 3.57 times less risky than NTT DATA. It trades about 0.03 of its potential returns per unit of risk. NTT DATA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,600  in NTT DATA on April 20, 2025 and sell it today you would earn a total of  660.00  from holding NTT DATA or generate 41.25% return on investment over 90 days.

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

Veolia Environnement SA  vs.  NTT DATA

Veolia Environnement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

NTT DATA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NTT DATA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NTT DATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and NTT DATA

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

The idea behind Veolia Environnement SA and NTT DATA 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.