Correlation Between AOYAMA TRADING and Pernod Ricard

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

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

Diversification Opportunities for AOYAMA TRADING and Pernod Ricard

-0.3

Correlation Coefficient

AOYAMA TRADING  Pernod Ricard

Very good diversification

The 3 months correlation between AOYAMA and Pernod is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and Pernod Ricard go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and Pernod Ricard

Assuming the 90 days horizon AOYAMA TRADING is expected to under-perform the Pernod Ricard. But the stock apears to be less risky and, when comparing its historical volatility, AOYAMA TRADING is 1.26 times less risky than Pernod Ricard. The stock trades about -0.19 of its potential returns per unit of risk. The Pernod Ricard SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  10,940  in Pernod Ricard SA on October 26, 2024 and sell it today you would lose (350.00) from holding Pernod Ricard SA or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

AOYAMA TRADING  vs.  Pernod Ricard SA

AOYAMA TRADING

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AOYAMA TRADING and Pernod Ricard

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

The idea behind AOYAMA TRADING and Pernod Ricard SA 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.