Correlation Between Derichebourg and Haulotte Group

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

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

Diversification Opportunities for Derichebourg and Haulotte Group

0.5

Correlation Coefficient

Derichebourg  Haulotte Group

Very weak diversification

The 3 months correlation between Derichebourg and Haulotte is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Haulotte Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haulotte Group SA and Derichebourg 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 Derichebourg are associated (or correlated) with Haulotte Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haulotte Group SA has no effect on the direction of Derichebourg i.e., Derichebourg and Haulotte Group go up and down completely randomly.

Pair Corralation between Derichebourg and Haulotte Group

Assuming the 90 days trading horizon Derichebourg is expected to under-perform the Haulotte Group. But the stock apears to be less risky and, when comparing its historical volatility, Derichebourg is 1.23 times less risky than Haulotte Group. The stock trades about -0.07 of its potential returns per unit of risk. The Haulotte Group SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Haulotte Group SA on September 1, 2024 and sell it today you would lose (21.00) from holding Haulotte Group SA or give up 7.22% of portfolio value over 90 days.

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

Derichebourg  vs.  Haulotte Group SA

Derichebourg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Derichebourg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Haulotte Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Derichebourg and Haulotte Group

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

The idea behind Derichebourg and Haulotte Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.