Correlation Between Compagnie Financire and Compagnie Financiere

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

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

Diversification Opportunities for Compagnie Financire and Compagnie Financiere

0.79

Correlation Coefficient

Compagnie Financire  Compagnie Financiere

Poor diversification

The 3 months correlation between Compagnie and Compagnie is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Compagnie Financire 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 Compagnie Financire Richemont are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Compagnie Financiere go up and down completely randomly.

Pair Corralation between Compagnie Financire and Compagnie Financiere

Assuming the 90 days horizon Compagnie Financire Richemont is expected to generate 1.45 times more return on investment than Compagnie Financiere. However, Compagnie Financire is 1.45 times more volatile than Compagnie Financiere Richemont. It trades about -0.02 of its potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about -0.07 per unit of risk. If you would invest  15,227  in Compagnie Financire Richemont on August 30, 2024 and sell it today you would lose (1,134) from holding Compagnie Financire Richemont or give up 7.45% of portfolio value over 90 days.

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

Compagnie Financire Richemont  vs.  Compagnie Financiere Richemont

Compagnie Financire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Financire Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Compagnie Financire is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie Financiere

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Financiere Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie Financire and Compagnie Financiere

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

The idea behind Compagnie Financire Richemont and Compagnie Financiere Richemont 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.