Correlation Between Maisons Du and Smcp SAS

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

By analyzing existing cross correlation between Maisons du Monde and Smcp SAS, you can compare the effects of market volatilities on Maisons Du and Smcp SAS 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 Maisons Du with a short position of Smcp SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maisons Du and Smcp SAS.

Diversification Opportunities for Maisons Du and Smcp SAS

0.12

Correlation Coefficient

Maisons Du  Smcp SAS

Average diversification

The 3 months correlation between Maisons and Smcp is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Maisons du Monde and Smcp SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smcp SAS and Maisons Du 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 Maisons du Monde are associated (or correlated) with Smcp SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smcp SAS has no effect on the direction of Maisons Du i.e., Maisons Du and Smcp SAS go up and down completely randomly.

Pair Corralation between Maisons Du and Smcp SAS

Assuming the 90 days trading horizon Maisons Du is expected to generate 6.17 times less return on investment than Smcp SAS. But when comparing it to its historical volatility, Maisons du Monde is 1.17 times less risky than Smcp SAS. It trades about 0.03 of its potential returns per unit of risk. Smcp SAS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  247.00  in Smcp SAS on September 26, 2024 and sell it today you would earn a total of  102.00  from holding Smcp SAS or generate 41.3% return on investment over 90 days.

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

Maisons du Monde  vs.  Smcp SAS

Maisons du Monde

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maisons du Monde are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Maisons Du is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Smcp SAS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maisons Du and Smcp SAS

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

The idea behind Maisons du Monde and Smcp SAS 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.