Correlation Between Gascogne and Augros Cosmetic

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

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

Diversification Opportunities for Gascogne and Augros Cosmetic

-0.4

Correlation Coefficient

Gascogne  Augros Cosmetic

Very good diversification

The 3 months correlation between Gascogne and Augros is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gascogne SA and Augros Cosmetic Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augros Cosmetic Packaging and Gascogne 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 Gascogne SA are associated (or correlated) with Augros Cosmetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augros Cosmetic Packaging has no effect on the direction of Gascogne i.e., Gascogne and Augros Cosmetic go up and down completely randomly.

Pair Corralation between Gascogne and Augros Cosmetic

Assuming the 90 days trading horizon Gascogne SA is expected to under-perform the Augros Cosmetic. But the stock apears to be less risky and, when comparing its historical volatility, Gascogne SA is 1.97 times less risky than Augros Cosmetic. The stock trades about -0.04 of its potential returns per unit of risk. The Augros Cosmetic Packaging is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  488.00  in Augros Cosmetic Packaging on September 16, 2024 and sell it today you would earn a total of  232.00  from holding Augros Cosmetic Packaging or generate 47.54% return on investment over 90 days.

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

Gascogne SA  vs.  Augros Cosmetic Packaging

Gascogne SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gascogne 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.

Augros Cosmetic Packaging

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Augros Cosmetic Packaging are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Augros Cosmetic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gascogne and Augros Cosmetic

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

The idea behind Gascogne SA and Augros Cosmetic Packaging 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.