Correlation Between Groupe Guillin and Derichebourg

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

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

Diversification Opportunities for Groupe Guillin and Derichebourg

-0.43

Correlation Coefficient

Groupe Guillin  Derichebourg

Very good diversification

The 3 months correlation between Groupe and Derichebourg is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Groupe Guillin SA and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg and Groupe Guillin 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 Groupe Guillin SA are associated (or correlated) with Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Groupe Guillin i.e., Groupe Guillin and Derichebourg go up and down completely randomly.

Pair Corralation between Groupe Guillin and Derichebourg

Assuming the 90 days trading horizon Groupe Guillin SA is expected to under-perform the Derichebourg. But the stock apears to be less risky and, when comparing its historical volatility, Groupe Guillin SA is 1.39 times less risky than Derichebourg. The stock trades about -0.02 of its potential returns per unit of risk. The Derichebourg is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  517.00  in Derichebourg on December 26, 2024 and sell it today you would earn a total of  66.00  from holding Derichebourg or generate 12.77% return on investment over 90 days.

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

Groupe Guillin SA  vs.  Derichebourg

Groupe Guillin SA

Risk-Adjusted Performance

Very Weak

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

Derichebourg

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Derichebourg sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Groupe Guillin and Derichebourg

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

The idea behind Groupe Guillin SA and Derichebourg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.