Correlation Between Interparfums and Remy Cointreau

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

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

Diversification Opportunities for Interparfums and Remy Cointreau

0.8

Correlation Coefficient

Interparfums  Remy Cointreau

Very poor diversification

The 3 months correlation between Interparfums and Remy is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and Remy Cointreau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau and Interparfums 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 Interparfums SA are associated (or correlated) with Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau has no effect on the direction of Interparfums i.e., Interparfums and Remy Cointreau go up and down completely randomly.

Pair Corralation between Interparfums and Remy Cointreau

Assuming the 90 days trading horizon Interparfums SA is expected to generate 0.95 times more return on investment than Remy Cointreau. However, Interparfums SA is 1.05 times less risky than Remy Cointreau. It trades about -0.05 of its potential returns per unit of risk. Remy Cointreau is currently generating about -0.09 per unit of risk. If you would invest  4,330  in Interparfums SA on September 4, 2024 and sell it today you would lose (365.00) from holding Interparfums SA or give up 8.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Interparfums SA  vs.  Remy Cointreau

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.

Remy Cointreau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remy Cointreau 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.

Pair Trading with Interparfums and Remy Cointreau

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

The idea behind Interparfums SA and Remy Cointreau 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.