Correlation Between Compagnie Financiere and CPH Chemie

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

By analyzing existing cross correlation between Compagnie Financiere Tradition and CPH Chemie und, you can compare the effects of market volatilities on Compagnie Financiere and CPH Chemie 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 Financiere with a short position of CPH Chemie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financiere and CPH Chemie.

Diversification Opportunities for Compagnie Financiere and CPH Chemie

0.29

Correlation Coefficient

Compagnie Financiere  CPH Chemie

Modest diversification

The 3 months correlation between Compagnie and CPH is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financiere Tradition and CPH Chemie und in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPH Chemie und and Compagnie Financiere 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 Financiere Tradition are associated (or correlated) with CPH Chemie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPH Chemie und has no effect on the direction of Compagnie Financiere i.e., Compagnie Financiere and CPH Chemie go up and down completely randomly.

Pair Corralation between Compagnie Financiere and CPH Chemie

Assuming the 90 days trading horizon Compagnie Financiere Tradition is expected to generate 0.88 times more return on investment than CPH Chemie. However, Compagnie Financiere Tradition is 1.13 times less risky than CPH Chemie. It trades about 0.1 of its potential returns per unit of risk. CPH Chemie und is currently generating about -0.01 per unit of risk. If you would invest  18,450  in Compagnie Financiere Tradition on December 30, 2024 and sell it today you would earn a total of  1,950  from holding Compagnie Financiere Tradition or generate 10.57% return on investment over 90 days.

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

Compagnie Financiere Tradition  vs.  CPH Chemie und

Compagnie Financiere

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financiere Tradition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compagnie Financiere may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CPH Chemie und

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPH Chemie und has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CPH Chemie is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Compagnie Financiere and CPH Chemie

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

The idea behind Compagnie Financiere Tradition and CPH Chemie und 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.