Correlation Between Trigano SA and Fountaine Pajo

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

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

Diversification Opportunities for Trigano SA and Fountaine Pajo

-0.32

Correlation Coefficient

Trigano SA  Fountaine Pajo

Very good diversification

The 3 months correlation between Trigano and Fountaine is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Trigano SA and Fountaine Pajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountaine Pajo and Trigano 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 Trigano SA are associated (or correlated) with Fountaine Pajo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountaine Pajo has no effect on the direction of Trigano SA i.e., Trigano SA and Fountaine Pajo go up and down completely randomly.

Pair Corralation between Trigano SA and Fountaine Pajo

Assuming the 90 days trading horizon Trigano SA is expected to generate 1.36 times more return on investment than Fountaine Pajo. However, Trigano SA is 1.36 times more volatile than Fountaine Pajo. It trades about 0.11 of its potential returns per unit of risk. Fountaine Pajo is currently generating about -0.08 per unit of risk. If you would invest  10,175  in Trigano SA on September 3, 2024 and sell it today you would earn a total of  1,735  from holding Trigano SA or generate 17.05% return on investment over 90 days.

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

Trigano SA  vs.  Fountaine Pajo

Trigano SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Fountaine Pajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountaine Pajo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Trigano SA and Fountaine Pajo

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

The idea behind Trigano SA and Fountaine Pajo 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.