Correlation Between Carrefour and Compagnie Generale

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

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

Diversification Opportunities for Carrefour and Compagnie Generale

0.49

Correlation Coefficient

Carrefour  Compagnie Generale

Very weak diversification

The 3 months correlation between Carrefour and Compagnie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA PK and Compagnie Generale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Generale des and Carrefour 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 Carrefour SA PK are associated (or correlated) with Compagnie Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Generale des has no effect on the direction of Carrefour i.e., Carrefour and Compagnie Generale go up and down completely randomly.

Pair Corralation between Carrefour and Compagnie Generale

Assuming the 90 days horizon Carrefour is expected to generate 3.13 times less return on investment than Compagnie Generale. In addition to that, Carrefour is 1.05 times more volatile than Compagnie Generale des. It trades about 0.04 of its total potential returns per unit of risk. Compagnie Generale des is currently generating about 0.14 per unit of volatility. If you would invest  1,654  in Compagnie Generale des on October 24, 2024 and sell it today you would earn a total of  66.00  from holding Compagnie Generale des or generate 3.99% return on investment over 90 days.

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

Carrefour SA PK  vs.  Compagnie Generale des

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Compagnie Generale des

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Generale des are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Compagnie Generale is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carrefour and Compagnie Generale

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

The idea behind Carrefour SA PK and Compagnie Generale des 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.