Correlation Between Brait SE and Compagnie Financire

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

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

Diversification Opportunities for Brait SE and Compagnie Financire

0.12

Correlation Coefficient

Brait SE  Compagnie Financire

Average diversification

The 3 months correlation between Brait and Compagnie is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire and Brait SE 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 Brait SE are associated (or correlated) with Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of Brait SE i.e., Brait SE and Compagnie Financire go up and down completely randomly.

Pair Corralation between Brait SE and Compagnie Financire

Assuming the 90 days trading horizon Brait SE is expected to generate 4.8 times less return on investment than Compagnie Financire. In addition to that, Brait SE is 1.52 times more volatile than Compagnie Financire Richemont. It trades about 0.04 of its total potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.32 per unit of volatility. If you would invest  25,207,100  in Compagnie Financire Richemont on September 27, 2024 and sell it today you would earn a total of  2,400,900  from holding Compagnie Financire Richemont or generate 9.52% return on investment over 90 days.

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

Brait SE  vs.  Compagnie Financire Richemont

Brait SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Financire

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Compagnie Financire is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brait SE and Compagnie Financire

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

The idea behind Brait SE and Compagnie Financire Richemont 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.