Correlation Between Compagnie and Carrefour

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

By analyzing existing cross correlation between Compagnie de Saint Gobain and Carrefour SA PK, you can compare the effects of market volatilities on Compagnie and Carrefour 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 with a short position of Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Carrefour.

Diversification Opportunities for Compagnie and Carrefour

0.29

Correlation Coefficient

Compagnie  Carrefour

Modest diversification

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

Pair Corralation between Compagnie and Carrefour

Assuming the 90 days horizon Compagnie de Saint Gobain is expected to generate 0.96 times more return on investment than Carrefour. However, Compagnie de Saint Gobain is 1.04 times less risky than Carrefour. It trades about 0.02 of its potential returns per unit of risk. Carrefour SA PK is currently generating about -0.06 per unit of risk. If you would invest  1,701  in Compagnie de Saint Gobain on October 9, 2024 and sell it today you would earn a total of  78.00  from holding Compagnie de Saint Gobain or generate 4.59% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Carrefour SA PK

Compagnie de Saint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie de Saint Gobain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Compagnie is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Carrefour SA PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrefour SA PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Compagnie and Carrefour

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

The idea behind Compagnie de Saint Gobain and Carrefour SA PK 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.