Correlation Between Derichebourg and Claranova

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

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

Diversification Opportunities for Derichebourg and Claranova

0.09

Correlation Coefficient

Derichebourg  Claranova

Significant diversification

The 3 months correlation between Derichebourg and Claranova is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Claranova SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Claranova SE 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 Claranova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Claranova SE has no effect on the direction of Derichebourg i.e., Derichebourg and Claranova go up and down completely randomly.

Pair Corralation between Derichebourg and Claranova

Assuming the 90 days trading horizon Derichebourg is expected to under-perform the Claranova. But the stock apears to be less risky and, when comparing its historical volatility, Derichebourg is 1.44 times less risky than Claranova. The stock trades about -0.07 of its potential returns per unit of risk. The Claranova SE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Claranova SE on September 4, 2024 and sell it today you would lose (7.00) from holding Claranova SE or give up 4.76% of portfolio value over 90 days.

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

Derichebourg  vs.  Claranova SE

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 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.

Claranova SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Derichebourg and Claranova

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

The idea behind Derichebourg and Claranova SE 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.