Correlation Between QUEEN S and Compagnie

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

By analyzing existing cross correlation between QUEEN S ROAD and Compagnie de Saint Gobain, you can compare the effects of market volatilities on QUEEN S and Compagnie 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 QUEEN S with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUEEN S and Compagnie.

Diversification Opportunities for QUEEN S and Compagnie

-0.24

Correlation Coefficient

QUEEN S  Compagnie

Very good diversification

The 3 months correlation between QUEEN and Compagnie is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and QUEEN S 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 QUEEN S ROAD are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of QUEEN S i.e., QUEEN S and Compagnie go up and down completely randomly.

Pair Corralation between QUEEN S and Compagnie

Assuming the 90 days horizon QUEEN S is expected to generate 1.56 times less return on investment than Compagnie. In addition to that, QUEEN S is 3.0 times more volatile than Compagnie de Saint Gobain. It trades about 0.03 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.14 per unit of volatility. If you would invest  5,044  in Compagnie de Saint Gobain on October 27, 2024 and sell it today you would earn a total of  3,916  from holding Compagnie de Saint Gobain or generate 77.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

QUEEN S ROAD  vs.  Compagnie de Saint Gobain

QUEEN S ROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QUEEN S ROAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compagnie de Saint

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Compagnie may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with QUEEN S and Compagnie

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

The idea behind QUEEN S ROAD and Compagnie de Saint Gobain 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.