Correlation Between Air France and Pharnext

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

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

Diversification Opportunities for Air France and Pharnext

0.0

Correlation Coefficient

Air France  Pharnext

Pay attention - limited upside

The 3 months correlation between Air and Pharnext is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Pharnext SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharnext SA and Air France 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 Air France KLM SA are associated (or correlated) with Pharnext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharnext SA has no effect on the direction of Air France i.e., Air France and Pharnext go up and down completely randomly.

Pair Corralation between Air France and Pharnext

If you would invest  726.00  in Air France KLM SA on September 28, 2024 and sell it today you would earn a total of  83.00  from holding Air France KLM SA or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Air France KLM SA  vs.  Pharnext SA

Air France KLM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air France KLM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pharnext SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharnext SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pharnext is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Air France and Pharnext

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

The idea behind Air France KLM SA and Pharnext 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.