Correlation Between Danone SA and Danone SA

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

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

Diversification Opportunities for Danone SA and Danone SA

0.92

Correlation Coefficient

Danone SA  Danone SA

Almost no diversification

The 3 months correlation between Danone and Danone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Danone 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 Danone SA are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Danone SA i.e., Danone SA and Danone SA go up and down completely randomly.

Pair Corralation between Danone SA and Danone SA

Assuming the 90 days trading horizon Danone SA is expected to generate 1.37 times less return on investment than Danone SA. But when comparing it to its historical volatility, Danone SA is 1.05 times less risky than Danone SA. It trades about 0.04 of its potential returns per unit of risk. Danone SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,286  in Danone SA on August 31, 2024 and sell it today you would earn a total of  196.00  from holding Danone SA or generate 3.12% return on investment over 90 days.

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

Danone SA  vs.  Danone SA

Danone SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Danone SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Danone SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Danone SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Danone SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Danone SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Danone SA and Danone SA

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

The idea behind Danone SA and Danone 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.