Correlation Between Compagnie Des and Kering SA

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

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

Diversification Opportunities for Compagnie Des and Kering SA

-0.56

Correlation Coefficient

Compagnie Des  Kering SA

Excellent diversification

The 3 months correlation between Compagnie and Kering is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Tramways and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and Compagnie Des 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 Compagnie des Tramways are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Compagnie Des i.e., Compagnie Des and Kering SA go up and down completely randomly.

Pair Corralation between Compagnie Des and Kering SA

If you would invest (100.00) in Compagnie des Tramways on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Compagnie des Tramways or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Compagnie des Tramways  vs.  Kering SA

Compagnie des Tramways

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie des Tramways has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Compagnie Des is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Kering SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kering 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 Compagnie Des and Kering SA

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

The idea behind Compagnie des Tramways and Kering 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.