Correlation Between Cegedim SA and Ferm Casino

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

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

Diversification Opportunities for Cegedim SA and Ferm Casino

0.34

Correlation Coefficient

Cegedim SA  Ferm Casino

Weak diversification

The 3 months correlation between Cegedim and Ferm is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cegedim SA and Ferm Casino Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferm Casino Mun and Cegedim SA 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 Cegedim SA are associated (or correlated) with Ferm Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferm Casino Mun has no effect on the direction of Cegedim SA i.e., Cegedim SA and Ferm Casino go up and down completely randomly.

Pair Corralation between Cegedim SA and Ferm Casino

Assuming the 90 days trading horizon Cegedim SA is expected to under-perform the Ferm Casino. In addition to that, Cegedim SA is 1.26 times more volatile than Ferm Casino Mun. It trades about -0.14 of its total potential returns per unit of risk. Ferm Casino Mun is currently generating about -0.01 per unit of volatility. If you would invest  150,000  in Ferm Casino Mun on August 31, 2024 and sell it today you would lose (2,000) from holding Ferm Casino Mun or give up 1.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Cegedim SA  vs.  Ferm Casino Mun

Cegedim SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cegedim SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Ferm Casino Mun

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cegedim SA and Ferm Casino

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

The idea behind Cegedim SA and Ferm Casino Mun 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.