Correlation Between KERINGUNSPADR 110 and Compagnie Financire

Can any of the company-specific risk be diversified away by investing in both KERINGUNSPADR 110 and Compagnie Financire 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 KERINGUNSPADR 110 and Compagnie Financire into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KERINGUNSPADR 110 EO and Compagnie Financire Richemont, you can compare the effects of market volatilities on KERINGUNSPADR 110 and Compagnie Financire 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 KERINGUNSPADR 110 with a short position of Compagnie Financire. Check out your portfolio center. Please also check ongoing floating volatility patterns of KERINGUNSPADR 110 and Compagnie Financire.

Diversification Opportunities for KERINGUNSPADR 110 and Compagnie Financire

0.55

Correlation Coefficient

KERINGUNSPADR 110  Compagnie Financire

Very weak diversification

The 3 months correlation between KERINGUNSPADR and Compagnie is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KERINGUNSPADR 110 EO and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire and KERINGUNSPADR 110 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 KERINGUNSPADR 110 EO are associated (or correlated) with Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of KERINGUNSPADR 110 i.e., KERINGUNSPADR 110 and Compagnie Financire go up and down completely randomly.

Pair Corralation between KERINGUNSPADR 110 and Compagnie Financire

Assuming the 90 days trading horizon KERINGUNSPADR 110 is expected to generate 3.76 times less return on investment than Compagnie Financire. In addition to that, KERINGUNSPADR 110 is 1.1 times more volatile than Compagnie Financire Richemont. It trades about 0.03 of its total potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.12 per unit of volatility. If you would invest  1,160  in Compagnie Financire Richemont on September 23, 2024 and sell it today you would earn a total of  260.00  from holding Compagnie Financire Richemont or generate 22.41% return on investment over 90 days.

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

KERINGUNSPADR 110 EO  vs.  Compagnie Financire Richemont

KERINGUNSPADR 110

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KERINGUNSPADR 110 EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KERINGUNSPADR 110 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie Financire

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compagnie Financire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KERINGUNSPADR 110 and Compagnie Financire

The main advantage of trading using opposite KERINGUNSPADR 110 and Compagnie Financire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KERINGUNSPADR 110 position performs unexpectedly, Compagnie Financire 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 Financire will offset losses from the drop in Compagnie Financire's long position.

The idea behind KERINGUNSPADR 110 EO and Compagnie Financire Richemont 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.