Correlation Between Derichebourg and Aramis SAS

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

By analyzing existing cross correlation between Derichebourg and Aramis SAS, you can compare the effects of market volatilities on Derichebourg and Aramis SAS 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 Aramis SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derichebourg and Aramis SAS.

Diversification Opportunities for Derichebourg and Aramis SAS

0.04

Correlation Coefficient

Derichebourg  Aramis SAS

Significant diversification

The 3 months correlation between Derichebourg and Aramis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Aramis SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramis SAS 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 Aramis SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramis SAS has no effect on the direction of Derichebourg i.e., Derichebourg and Aramis SAS go up and down completely randomly.

Pair Corralation between Derichebourg and Aramis SAS

Assuming the 90 days trading horizon Derichebourg is expected to generate 1.15 times more return on investment than Aramis SAS. However, Derichebourg is 1.15 times more volatile than Aramis SAS. It trades about 0.19 of its potential returns per unit of risk. Aramis SAS is currently generating about 0.03 per unit of risk. If you would invest  429.00  in Derichebourg on December 4, 2024 and sell it today you would earn a total of  124.00  from holding Derichebourg or generate 28.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Derichebourg  vs.  Aramis SAS

Derichebourg

Risk-Adjusted Performance

Good

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

Aramis SAS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aramis SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aramis SAS 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 Aramis SAS

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

The idea behind Derichebourg and Aramis SAS 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.

Check out your portfolio center.

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.