Correlation Between Claranova and Derichebourg

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

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

Diversification Opportunities for Claranova and Derichebourg

0.93

Correlation Coefficient

Claranova  Derichebourg

Almost no diversification

The 3 months correlation between Claranova and Derichebourg is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Claranova SE and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg and Claranova 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 Claranova SE are associated (or correlated) with Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Claranova i.e., Claranova and Derichebourg go up and down completely randomly.

Pair Corralation between Claranova and Derichebourg

Assuming the 90 days trading horizon Claranova SE is expected to generate 2.76 times more return on investment than Derichebourg. However, Claranova is 2.76 times more volatile than Derichebourg. It trades about 0.2 of its potential returns per unit of risk. Derichebourg is currently generating about 0.08 per unit of risk. If you would invest  126.00  in Claranova SE on December 30, 2024 and sell it today you would earn a total of  112.00  from holding Claranova SE or generate 88.89% return on investment over 90 days.

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

Claranova SE  vs.  Derichebourg

Claranova SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Claranova SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Claranova sustained solid returns over the last few months and may actually be approaching a breakup point.

Derichebourg

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Derichebourg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Claranova and Derichebourg

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

The idea behind Claranova SE and Derichebourg 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.