Correlation Between Kering SA and Salvatore Ferragamo

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

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

Diversification Opportunities for Kering SA and Salvatore Ferragamo

0.85

Correlation Coefficient

Kering SA  Salvatore Ferragamo

Very poor diversification

The 3 months correlation between Kering and Salvatore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and Salvatore Ferragamo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salvatore Ferragamo SpA and Kering SA 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 Kering SA are associated (or correlated) with Salvatore Ferragamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salvatore Ferragamo SpA has no effect on the direction of Kering SA i.e., Kering SA and Salvatore Ferragamo go up and down completely randomly.

Pair Corralation between Kering SA and Salvatore Ferragamo

Assuming the 90 days horizon Kering SA is expected to generate 0.73 times more return on investment than Salvatore Ferragamo. However, Kering SA is 1.37 times less risky than Salvatore Ferragamo. It trades about 0.02 of its potential returns per unit of risk. Salvatore Ferragamo SpA is currently generating about 0.0 per unit of risk. If you would invest  2,543  in Kering SA on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Kering SA or generate 1.34% return on investment over 90 days.

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

Kering SA  vs.  Salvatore Ferragamo SpA

Kering SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kering SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Kering SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salvatore Ferragamo SpA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kering SA and Salvatore Ferragamo

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

The idea behind Kering SA and Salvatore Ferragamo SpA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.