Correlation Between Hubersuhner and Compagnie Financiere

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

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

Diversification Opportunities for Hubersuhner and Compagnie Financiere

-0.68

Correlation Coefficient

Hubersuhner  Compagnie Financiere

Excellent diversification

The 3 months correlation between Hubersuhner and Compagnie is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hubersuhner AG and Compagnie Financiere Tradition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Hubersuhner 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 Hubersuhner AG are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Hubersuhner i.e., Hubersuhner and Compagnie Financiere go up and down completely randomly.

Pair Corralation between Hubersuhner and Compagnie Financiere

Assuming the 90 days trading horizon Hubersuhner AG is expected to under-perform the Compagnie Financiere. But the stock apears to be less risky and, when comparing its historical volatility, Hubersuhner AG is 1.11 times less risky than Compagnie Financiere. The stock trades about -0.54 of its potential returns per unit of risk. The Compagnie Financiere Tradition is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  15,850  in Compagnie Financiere Tradition on September 16, 2024 and sell it today you would earn a total of  950.00  from holding Compagnie Financiere Tradition or generate 5.99% return on investment over 90 days.

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

Hubersuhner AG  vs.  Compagnie Financiere Tradition

Hubersuhner AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hubersuhner AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Compagnie Financiere

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financiere Tradition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compagnie Financiere may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hubersuhner and Compagnie Financiere

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

The idea behind Hubersuhner AG and Compagnie Financiere Tradition 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.