Correlation Between Centrale DAchat and Groupe JAJ

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

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

Diversification Opportunities for Centrale DAchat and Groupe JAJ

0.46

Correlation Coefficient

Centrale DAchat  Groupe JAJ

Very weak diversification

The 3 months correlation between Centrale and Groupe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Centrale dAchat Franaise and Groupe JAJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe JAJ and Centrale DAchat 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 Centrale dAchat Franaise are associated (or correlated) with Groupe JAJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe JAJ has no effect on the direction of Centrale DAchat i.e., Centrale DAchat and Groupe JAJ go up and down completely randomly.

Pair Corralation between Centrale DAchat and Groupe JAJ

Assuming the 90 days trading horizon Centrale DAchat is expected to generate 64.56 times less return on investment than Groupe JAJ. But when comparing it to its historical volatility, Centrale dAchat Franaise is 7.76 times less risky than Groupe JAJ. It trades about 0.0 of its potential returns per unit of risk. Groupe JAJ is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Groupe JAJ on September 16, 2024 and sell it today you would lose (17.00) from holding Groupe JAJ or give up 14.78% of portfolio value over 90 days.

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

Centrale dAchat Franaise  vs.  Groupe JAJ

Centrale dAchat Franaise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrale dAchat Franaise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centrale DAchat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Groupe JAJ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe JAJ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe JAJ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centrale DAchat and Groupe JAJ

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

The idea behind Centrale dAchat Franaise and Groupe JAJ 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.