Correlation Between Financiere Marjos and Txcom SA

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

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

Diversification Opportunities for Financiere Marjos and Txcom SA

0.64

Correlation Coefficient

Financiere Marjos  Txcom SA

Poor diversification

The 3 months correlation between Financiere and Txcom is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Financiere Marjos SA and Txcom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Txcom SA and Financiere Marjos 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 Financiere Marjos SA are associated (or correlated) with Txcom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Txcom SA has no effect on the direction of Financiere Marjos i.e., Financiere Marjos and Txcom SA go up and down completely randomly.

Pair Corralation between Financiere Marjos and Txcom SA

Assuming the 90 days trading horizon Financiere Marjos SA is expected to generate 7.35 times more return on investment than Txcom SA. However, Financiere Marjos is 7.35 times more volatile than Txcom SA. It trades about 0.1 of its potential returns per unit of risk. Txcom SA is currently generating about -0.16 per unit of risk. If you would invest  11.00  in Financiere Marjos SA on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Financiere Marjos SA or generate 9.09% return on investment over 90 days.

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

Financiere Marjos SA  vs.  Txcom SA

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.

Txcom SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Txcom SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Txcom SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Financiere Marjos and Txcom SA

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

The idea behind Financiere Marjos SA and Txcom 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 Global Correlations module to find global opportunities by holding instruments from different markets.