Correlation Between Guerbet S and Interparfums

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

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

Diversification Opportunities for Guerbet S and Interparfums

0.77

Correlation Coefficient

Guerbet S  Interparfums

Poor diversification

The 3 months correlation between Guerbet and Interparfums is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guerbet S A and Interparfums SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interparfums SA and Guerbet S 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 Guerbet S A are associated (or correlated) with Interparfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interparfums SA has no effect on the direction of Guerbet S i.e., Guerbet S and Interparfums go up and down completely randomly.

Pair Corralation between Guerbet S and Interparfums

Assuming the 90 days trading horizon Guerbet S A is expected to under-perform the Interparfums. But the stock apears to be less risky and, when comparing its historical volatility, Guerbet S A is 1.07 times less risky than Interparfums. The stock trades about -0.08 of its potential returns per unit of risk. The Interparfums SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,820  in Interparfums SA on September 26, 2024 and sell it today you would earn a total of  140.00  from holding Interparfums SA or generate 3.66% return on investment over 90 days.

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

Guerbet S A  vs.  Interparfums SA

Guerbet S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerbet S A 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 basic 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.

Interparfums SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interparfums SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Guerbet S and Interparfums

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

The idea behind Guerbet S A and Interparfums 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.