Correlation Between Societe Generale and Financiere Marjos

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

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

Diversification Opportunities for Societe Generale and Financiere Marjos

0.61

Correlation Coefficient

Societe Generale  Financiere Marjos

Poor diversification

The 3 months correlation between Societe and Financiere is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale 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 Societe Generale 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 Societe Generale 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 Societe Generale i.e., Societe Generale and Financiere Marjos go up and down completely randomly.

Pair Corralation between Societe Generale and Financiere Marjos

Assuming the 90 days trading horizon Societe Generale is expected to generate 3.22 times less return on investment than Financiere Marjos. But when comparing it to its historical volatility, Societe Generale SA is 2.28 times less risky than Financiere Marjos. It trades about 0.12 of its potential returns per unit of risk. 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 2, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Societe Generale SA  vs.  Financiere Marjos SA

Societe Generale

Risk-Adjusted Performance

9 of 100

OK

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

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 Societe Generale and Financiere Marjos

The main advantage of trading using opposite Societe Generale and Financiere Marjos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale 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 Societe Generale 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.