Correlation Between Pernod Ricard and Andrew Peller

Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Andrew Peller 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 Andrew Peller 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 Andrew Peller Limited, you can compare the effects of market volatilities on Pernod Ricard and Andrew Peller 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 Andrew Peller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Andrew Peller.

Diversification Opportunities for Pernod Ricard and Andrew Peller

0.46

Correlation Coefficient

Pernod Ricard  Andrew Peller

Very weak diversification

The 3 months correlation between Pernod and Andrew is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Andrew Peller Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andrew Peller Limited 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 Andrew Peller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andrew Peller Limited has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Andrew Peller go up and down completely randomly.

Pair Corralation between Pernod Ricard and Andrew Peller

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Andrew Peller. In addition to that, Pernod Ricard is 1.21 times more volatile than Andrew Peller Limited. It trades about -0.14 of its total potential returns per unit of risk. Andrew Peller Limited is currently generating about -0.02 per unit of volatility. If you would invest  290.00  in Andrew Peller Limited on September 19, 2024 and sell it today you would lose (7.00) from holding Andrew Peller Limited or give up 2.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.54%
Values	Daily Returns

Pernod Ricard SA  vs.  Andrew Peller Limited

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. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andrew Peller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Andrew Peller is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pernod Ricard and Andrew Peller

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

The idea behind Pernod Ricard SA and Andrew Peller Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .