Correlation Between Damartex and Chargeurs

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

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

Diversification Opportunities for Damartex and Chargeurs

0.4

Correlation Coefficient

Damartex  Chargeurs

Very weak diversification

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

Pair Corralation between Damartex and Chargeurs

Assuming the 90 days trading horizon Damartex is expected to under-perform the Chargeurs. But the stock apears to be less risky and, when comparing its historical volatility, Damartex is 1.71 times less risky than Chargeurs. The stock trades about -0.57 of its potential returns per unit of risk. The Chargeurs SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  989.00  in Chargeurs SA on September 29, 2024 and sell it today you would lose (9.00) from holding Chargeurs SA or give up 0.91% of portfolio value over 90 days.

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

Damartex  vs.  Chargeurs SA

Damartex

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Damartex and Chargeurs

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

The idea behind Damartex and Chargeurs 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..