Correlation Between Pernod Ricard and Remy Cointreau

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

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

Diversification Opportunities for Pernod Ricard and Remy Cointreau

0.89

Correlation Coefficient

Pernod Ricard  Remy Cointreau

Very poor diversification

The 3 months correlation between Pernod and Remy is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA and Pernod Ricard 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 Pernod Ricard 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 SA has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Remy Cointreau go up and down completely randomly.

Pair Corralation between Pernod Ricard and Remy Cointreau

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Remy Cointreau. In addition to that, Pernod Ricard is 1.33 times more volatile than Remy Cointreau SA. It trades about -0.07 of its total potential returns per unit of risk. Remy Cointreau SA is currently generating about -0.01 per unit of volatility. If you would invest  692.00  in Remy Cointreau SA on September 13, 2024 and sell it today you would lose (29.00) from holding Remy Cointreau SA or give up 4.19% of portfolio value over 90 days.

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

Pernod Ricard SA  vs.  Remy Cointreau SA

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pernod Ricard SA 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 fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Remy Cointreau SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Remy Cointreau is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pernod Ricard and Remy Cointreau

The main advantage of trading using opposite Pernod Ricard and Remy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard 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 Pernod Ricard SA and Remy Cointreau 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.