Correlation Between Cegedim SA and Financiere Marjos

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

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

Diversification Opportunities for Cegedim SA and Financiere Marjos

-0.72

Correlation Coefficient

Cegedim SA  Financiere Marjos

Pay attention - limited upside

The 3 months correlation between Cegedim and Financiere is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cegedim SA and Financiere Marjos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiere Marjos and Cegedim 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 Cegedim SA are associated (or correlated) with Financiere Marjos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiere Marjos has no effect on the direction of Cegedim SA i.e., Cegedim SA and Financiere Marjos go up and down completely randomly.

Pair Corralation between Cegedim SA and Financiere Marjos

Assuming the 90 days trading horizon Cegedim SA is expected to under-perform the Financiere Marjos. But the stock apears to be less risky and, when comparing its historical volatility, Cegedim SA is 2.79 times less risky than Financiere Marjos. The stock trades about -0.14 of its potential returns per unit of risk. The Financiere Marjos SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  6.50  in Financiere Marjos SA on September 4, 2024 and sell it today you would earn a total of  3.50  from holding Financiere Marjos SA or generate 53.85% return on investment over 90 days.

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

Cegedim SA  vs.  Financiere Marjos SA

Cegedim SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cegedim 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 primary 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.

Financiere Marjos

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financiere Marjos SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Financiere Marjos sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cegedim SA and Financiere Marjos

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

The idea behind Cegedim SA and Financiere Marjos 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.