Correlation Between Chargeurs and Financiere Marjos

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

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

Diversification Opportunities for Chargeurs and Financiere Marjos

-0.46

Correlation Coefficient

Chargeurs  Financiere Marjos

Very good diversification

The 3 months correlation between Chargeurs and Financiere is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chargeurs SA and Financiere Marjos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiere Marjos and Chargeurs 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 Chargeurs SA are associated (or correlated) with Financiere Marjos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiere Marjos has no effect on the direction of Chargeurs i.e., Chargeurs and Financiere Marjos go up and down completely randomly.

Pair Corralation between Chargeurs and Financiere Marjos

Assuming the 90 days trading horizon Chargeurs SA is expected to under-perform the Financiere Marjos. But the stock apears to be less risky and, when comparing its historical volatility, Chargeurs SA is 2.82 times less risky than Financiere Marjos. The stock trades about -0.02 of its potential returns per unit of risk. The Financiere Marjos SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Financiere Marjos SA on September 28, 2024 and sell it today you would lose (1.00) from holding Financiere Marjos SA or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.23%
Values	Daily Returns

Chargeurs SA  vs.  Financiere Marjos SA

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Financiere Marjos

Risk-Adjusted Performance

19 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financiere Marjos SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Financiere Marjos sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chargeurs and Financiere Marjos

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

The idea behind Chargeurs SA and Financiere Marjos SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.