Correlation Between Derichebourg and Groupe Guillin

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

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

Diversification Opportunities for Derichebourg and Groupe Guillin

0.81

Correlation Coefficient

Derichebourg  Groupe Guillin

Very poor diversification

The 3 months correlation between Derichebourg and Groupe is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Groupe Guillin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Guillin SA and Derichebourg 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 Derichebourg are associated (or correlated) with Groupe Guillin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Guillin SA has no effect on the direction of Derichebourg i.e., Derichebourg and Groupe Guillin go up and down completely randomly.

Pair Corralation between Derichebourg and Groupe Guillin

Assuming the 90 days trading horizon Derichebourg is expected to generate 1.32 times more return on investment than Groupe Guillin. However, Derichebourg is 1.32 times more volatile than Groupe Guillin SA. It trades about 0.05 of its potential returns per unit of risk. Groupe Guillin SA is currently generating about 0.0 per unit of risk. If you would invest  433.00  in Derichebourg on October 22, 2024 and sell it today you would earn a total of  95.00  from holding Derichebourg or generate 21.94% return on investment over 90 days.

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

Derichebourg  vs.  Groupe Guillin SA

Derichebourg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Groupe Guillin SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupe Guillin SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Groupe Guillin is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Derichebourg and Groupe Guillin

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

The idea behind Derichebourg and Groupe Guillin 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.