Correlation Between Compagnie Financire and Naspers

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

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

Diversification Opportunities for Compagnie Financire and Naspers

0.39

Correlation Coefficient

Compagnie Financire  Naspers

Weak diversification

The 3 months correlation between Compagnie and Naspers is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited and Compagnie Financire 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 Compagnie Financire Richemont are associated (or correlated) with Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Naspers go up and down completely randomly.

Pair Corralation between Compagnie Financire and Naspers

Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 0.94 times more return on investment than Naspers. However, Compagnie Financire Richemont is 1.06 times less risky than Naspers. It trades about 0.1 of its potential returns per unit of risk. Naspers Limited is currently generating about 0.08 per unit of risk. If you would invest  28,470,500  in Compagnie Financire Richemont on December 29, 2024 and sell it today you would earn a total of  4,366,900  from holding Compagnie Financire Richemont or generate 15.34% return on investment over 90 days.

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

Compagnie Financire Richemont  vs.  Naspers Limited

Compagnie Financire

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Compagnie Financire exhibited solid returns over the last few months and may actually be approaching a breakup point.

Naspers Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Naspers Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Naspers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Compagnie Financire and Naspers

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

The idea behind Compagnie Financire Richemont and Naspers Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.