Correlation Between Aryzta AG and Danone PK

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

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

Diversification Opportunities for Aryzta AG and Danone PK

0.0

Correlation Coefficient

Aryzta AG  Danone PK

Pay attention - limited upside

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

Pair Corralation between Aryzta AG and Danone PK

If you would invest  83.00  in Aryzta AG PK on December 4, 2024 and sell it today you would earn a total of  22.00  from holding Aryzta AG PK or generate 26.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aryzta AG PK  vs.  Danone PK

Aryzta AG PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Danone PK

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aryzta AG and Danone PK

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

The idea behind Aryzta AG PK and Danone PK 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.