Correlation Between Agrogeneration and Interparfums

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

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

Diversification Opportunities for Agrogeneration and Interparfums

0.36

Correlation Coefficient

Agrogeneration  Interparfums

Weak diversification

The 3 months correlation between Agrogeneration and Interparfums is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Agrogeneration and Interparfums SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interparfums SA and Agrogeneration 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 Agrogeneration are associated (or correlated) with Interparfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interparfums SA has no effect on the direction of Agrogeneration i.e., Agrogeneration and Interparfums go up and down completely randomly.

Pair Corralation between Agrogeneration and Interparfums

Assuming the 90 days trading horizon Agrogeneration is expected to generate 1.88 times more return on investment than Interparfums. However, Agrogeneration is 1.88 times more volatile than Interparfums SA. It trades about 0.04 of its potential returns per unit of risk. Interparfums SA is currently generating about 0.0 per unit of risk. If you would invest  5.34  in Agrogeneration on September 23, 2024 and sell it today you would earn a total of  0.60  from holding Agrogeneration or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agrogeneration  vs.  Interparfums SA

Agrogeneration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Interparfums SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interparfums SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Interparfums is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agrogeneration and Interparfums

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

The idea behind Agrogeneration and Interparfums 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.