Correlation Between Christian Dior and Groupimo

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

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

Diversification Opportunities for Christian Dior and Groupimo

-0.7

Correlation Coefficient

Christian Dior  Groupimo

Excellent diversification

The 3 months correlation between Christian and Groupimo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Groupimo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupimo SA and Christian Dior 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 Christian Dior SE are associated (or correlated) with Groupimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupimo SA has no effect on the direction of Christian Dior i.e., Christian Dior and Groupimo go up and down completely randomly.

Pair Corralation between Christian Dior and Groupimo

Assuming the 90 days trading horizon Christian Dior SE is expected to generate 0.2 times more return on investment than Groupimo. However, Christian Dior SE is 5.04 times less risky than Groupimo. It trades about -0.02 of its potential returns per unit of risk. Groupimo SA is currently generating about -0.01 per unit of risk. If you would invest  75,788  in Christian Dior SE on October 15, 2024 and sell it today you would lose (15,238) from holding Christian Dior SE or give up 20.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.22%
Values	Daily Returns

Christian Dior SE  vs.  Groupimo SA

Christian Dior SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Christian Dior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Groupimo SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Groupimo SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupimo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Christian Dior and Groupimo

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

The idea behind Christian Dior SE and Groupimo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.