Correlation Between Burelle SA and Interparfums

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

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

Diversification Opportunities for Burelle SA and Interparfums

0.55

Correlation Coefficient

Burelle SA  Interparfums

Very weak diversification

The 3 months correlation between Burelle and Interparfums is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Burelle SA and Interparfums SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interparfums SA and Burelle SA 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 Burelle SA are associated (or correlated) with Interparfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interparfums SA has no effect on the direction of Burelle SA i.e., Burelle SA and Interparfums go up and down completely randomly.

Pair Corralation between Burelle SA and Interparfums

Assuming the 90 days trading horizon Burelle SA is expected to generate 1.47 times more return on investment than Interparfums. However, Burelle SA is 1.47 times more volatile than Interparfums SA. It trades about 0.1 of its potential returns per unit of risk. Interparfums SA is currently generating about 0.03 per unit of risk. If you would invest  33,100  in Burelle SA on December 1, 2024 and sell it today you would earn a total of  1,700  from holding Burelle SA or generate 5.14% return on investment over 90 days.

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

Burelle SA  vs.  Interparfums SA

Burelle SA

Risk-Adjusted Performance

OK

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

Interparfums SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interparfums SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Interparfums may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Burelle SA and Interparfums

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

The idea behind Burelle SA and Interparfums 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.