Correlation Between Fountaine Pajo and Chargeurs

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

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

Diversification Opportunities for Fountaine Pajo and Chargeurs

0.58

Correlation Coefficient

Fountaine Pajo  Chargeurs

Very weak diversification

The 3 months correlation between Fountaine and Chargeurs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fountaine Pajo and Chargeurs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chargeurs SA and Fountaine Pajo 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 Fountaine Pajo are associated (or correlated) with Chargeurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chargeurs SA has no effect on the direction of Fountaine Pajo i.e., Fountaine Pajo and Chargeurs go up and down completely randomly.

Pair Corralation between Fountaine Pajo and Chargeurs

Assuming the 90 days trading horizon Fountaine Pajo is expected to generate 0.76 times more return on investment than Chargeurs. However, Fountaine Pajo is 1.31 times less risky than Chargeurs. It trades about -0.03 of its potential returns per unit of risk. Chargeurs SA is currently generating about -0.11 per unit of risk. If you would invest  10,150  in Fountaine Pajo on September 13, 2024 and sell it today you would lose (390.00) from holding Fountaine Pajo or give up 3.84% of portfolio value over 90 days.

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

Fountaine Pajo  vs.  Chargeurs SA

Fountaine Pajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountaine Pajo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fountaine Pajo is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fountaine Pajo and Chargeurs

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

The idea behind Fountaine Pajo and Chargeurs SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.