Correlation Between Compagnie and Prodways Group
Can any of the company-specific risk be diversified away by investing in both Compagnie and Prodways Group 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 Compagnie and Prodways Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Prodways Group SA, you can compare the effects of market volatilities on Compagnie and Prodways Group 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 Compagnie with a short position of Prodways Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Prodways Group.
Diversification Opportunities for Compagnie and Prodways Group
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and Prodways is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Prodways Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodways Group SA and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Prodways Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodways Group SA has no effect on the direction of Compagnie i.e., Compagnie and Prodways Group go up and down completely randomly.
Pair Corralation between Compagnie and Prodways Group
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.63 times more return on investment than Prodways Group. However, Compagnie de Saint Gobain is 1.59 times less risky than Prodways Group. It trades about 0.16 of its potential returns per unit of risk. Prodways Group SA is currently generating about -0.25 per unit of risk. If you would invest 8,196 in Compagnie de Saint Gobain on September 8, 2024 and sell it today you would earn a total of 806.00 from holding Compagnie de Saint Gobain or generate 9.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Compagnie de Saint Gobain vs. Prodways Group SA
Performance |
Timeline |
Compagnie de Saint |
Prodways Group SA |
Compagnie and Prodways Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compagnie and Prodways Group
The main advantage of trading using opposite Compagnie and Prodways Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Prodways Group 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 Prodways Group will offset losses from the drop in Prodways Group's long position.Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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