Correlation Between NRJ and Television Francaise

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

By analyzing existing cross correlation between NRJ Group and Television Francaise 1, you can compare the effects of market volatilities on NRJ and Television Francaise 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 NRJ with a short position of Television Francaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRJ and Television Francaise.

Diversification Opportunities for NRJ and Television Francaise

0.84

Correlation Coefficient

NRJ  Television Francaise

Very poor diversification

The 3 months correlation between NRJ and Television is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NRJ Group and Television Francaise 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Television Francaise and NRJ 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 NRJ Group are associated (or correlated) with Television Francaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Television Francaise has no effect on the direction of NRJ i.e., NRJ and Television Francaise go up and down completely randomly.

Pair Corralation between NRJ and Television Francaise

Assuming the 90 days trading horizon NRJ Group is expected to under-perform the Television Francaise. But the stock apears to be less risky and, when comparing its historical volatility, NRJ Group is 1.3 times less risky than Television Francaise. The stock trades about -0.2 of its potential returns per unit of risk. The Television Francaise 1 is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  798.00  in Television Francaise 1 on September 2, 2024 and sell it today you would lose (74.00) from holding Television Francaise 1 or give up 9.27% of portfolio value over 90 days.

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

NRJ Group  vs.  Television Francaise 1

NRJ Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Television Francaise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Television Francaise 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward 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 NRJ and Television Francaise

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

The idea behind NRJ Group and Television Francaise 1 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.