Correlation Between DONTNOD Entertainment and Compagnie

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

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

Diversification Opportunities for DONTNOD Entertainment and Compagnie

-0.84

Correlation Coefficient

DONTNOD Entertainment  Compagnie

Pay attention - limited upside

The 3 months correlation between DONTNOD and Compagnie is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding DONTNOD Entertainment SA and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins and DONTNOD Entertainment 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 DONTNOD Entertainment SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of DONTNOD Entertainment i.e., DONTNOD Entertainment and Compagnie go up and down completely randomly.

Pair Corralation between DONTNOD Entertainment and Compagnie

Assuming the 90 days trading horizon DONTNOD Entertainment SA is expected to generate 3.77 times more return on investment than Compagnie. However, DONTNOD Entertainment is 3.77 times more volatile than Compagnie de Chemins. It trades about 0.19 of its potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.25 per unit of risk. If you would invest  98.00  in DONTNOD Entertainment SA on September 12, 2024 and sell it today you would earn a total of  22.00  from holding DONTNOD Entertainment SA or generate 22.45% return on investment over 90 days.

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

DONTNOD Entertainment SA  vs.  Compagnie de Chemins

DONTNOD Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONTNOD Entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Compagnie de Chemins

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DONTNOD Entertainment and Compagnie

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

The idea behind DONTNOD Entertainment SA and Compagnie de Chemins 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..