Correlation Between Carrefour and GEA GROUP

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

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

Diversification Opportunities for Carrefour and GEA GROUP

-0.63

Correlation Coefficient

Carrefour  GEA GROUP

Excellent diversification

The 3 months correlation between Carrefour and GEA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP and Carrefour 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 Carrefour SA are associated (or correlated) with GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of Carrefour i.e., Carrefour and GEA GROUP go up and down completely randomly.

Pair Corralation between Carrefour and GEA GROUP

Assuming the 90 days horizon Carrefour SA is expected to under-perform the GEA GROUP. In addition to that, Carrefour is 1.35 times more volatile than GEA GROUP. It trades about -0.02 of its total potential returns per unit of risk. GEA GROUP is currently generating about 0.22 per unit of volatility. If you would invest  4,808  in GEA GROUP on December 28, 2024 and sell it today you would earn a total of  1,012  from holding GEA GROUP or generate 21.05% return on investment over 90 days.

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

Carrefour SA  vs.  GEA GROUP

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GEA GROUP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GEA GROUP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GEA GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carrefour and GEA GROUP

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

The idea behind Carrefour SA and GEA GROUP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.