Correlation Between Manitou BF and Compagnie

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

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

Diversification Opportunities for Manitou BF and Compagnie

-0.45

Correlation Coefficient

Manitou BF  Compagnie

Very good diversification

The 3 months correlation between Manitou and Compagnie is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins and Manitou BF 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 Manitou BF SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of Manitou BF i.e., Manitou BF and Compagnie go up and down completely randomly.

Pair Corralation between Manitou BF and Compagnie

Assuming the 90 days trading horizon Manitou BF is expected to generate 4.15 times less return on investment than Compagnie. In addition to that, Manitou BF is 1.02 times more volatile than Compagnie de Chemins. It trades about 0.04 of its total potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.19 per unit of volatility. If you would invest  72,000  in Compagnie de Chemins on September 12, 2024 and sell it today you would earn a total of  18,000  from holding Compagnie de Chemins or generate 25.0% return on investment over 90 days.

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

Manitou BF SA  vs.  Compagnie de Chemins

Manitou BF SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Manitou BF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compagnie de Chemins

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manitou BF and Compagnie

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

The idea behind Manitou BF SA and Compagnie de Chemins 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.