Correlation Between Derichebourg and Groupe Pizzorno

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

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

Diversification Opportunities for Derichebourg and Groupe Pizzorno

-0.26

Correlation Coefficient

Derichebourg  Groupe Pizzorno

Very good diversification

The 3 months correlation between Derichebourg and Groupe is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Groupe Pizzorno Environnement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Pizzorno Envi 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 Pizzorno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Pizzorno Envi has no effect on the direction of Derichebourg i.e., Derichebourg and Groupe Pizzorno go up and down completely randomly.

Pair Corralation between Derichebourg and Groupe Pizzorno

Assuming the 90 days trading horizon Derichebourg is expected to generate 1.07 times more return on investment than Groupe Pizzorno. However, Derichebourg is 1.07 times more volatile than Groupe Pizzorno Environnement. It trades about 0.09 of its potential returns per unit of risk. Groupe Pizzorno Environnement is currently generating about -0.3 per unit of risk. If you would invest  524.00  in Derichebourg on November 29, 2024 and sell it today you would earn a total of  21.00  from holding Derichebourg or generate 4.01% return on investment over 90 days.

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

Derichebourg  vs.  Groupe Pizzorno Environnement

Derichebourg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 12 (%) 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.

Groupe Pizzorno Envi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Groupe Pizzorno Environnement 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.

Pair Trading with Derichebourg and Groupe Pizzorno

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

The idea behind Derichebourg and Groupe Pizzorno Environnement 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.