Correlation Between Consultatio and Rigolleau

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

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

Diversification Opportunities for Consultatio and Rigolleau

0.51

Correlation Coefficient

Consultatio  Rigolleau

Very weak diversification

The 3 months correlation between Consultatio and Rigolleau is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Consultatio SA and Rigolleau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rigolleau SA and Consultatio 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 Consultatio SA are associated (or correlated) with Rigolleau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rigolleau SA has no effect on the direction of Consultatio i.e., Consultatio and Rigolleau go up and down completely randomly.

Pair Corralation between Consultatio and Rigolleau

Assuming the 90 days trading horizon Consultatio SA is expected to under-perform the Rigolleau. In addition to that, Consultatio is 1.3 times more volatile than Rigolleau SA. It trades about -0.01 of its total potential returns per unit of risk. Rigolleau SA is currently generating about 0.12 per unit of volatility. If you would invest  89,900  in Rigolleau SA on September 14, 2024 and sell it today you would earn a total of  15,600  from holding Rigolleau SA or generate 17.35% return on investment over 90 days.

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

Consultatio SA  vs.  Rigolleau SA

Consultatio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consultatio SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Consultatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rigolleau SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rigolleau SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rigolleau sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consultatio and Rigolleau

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

The idea behind Consultatio SA and Rigolleau 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.