Correlation Between Derichebourg and Trigano SA

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

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

Diversification Opportunities for Derichebourg and Trigano SA

-0.22

Correlation Coefficient

Derichebourg  Trigano SA

Very good diversification

The 3 months correlation between Derichebourg and Trigano is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Trigano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigano 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 Trigano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigano SA has no effect on the direction of Derichebourg i.e., Derichebourg and Trigano SA go up and down completely randomly.

Pair Corralation between Derichebourg and Trigano SA

Assuming the 90 days trading horizon Derichebourg is expected to under-perform the Trigano SA. But the stock apears to be less risky and, when comparing its historical volatility, Derichebourg is 1.16 times less risky than Trigano SA. The stock trades about -0.07 of its potential returns per unit of risk. The Trigano SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10,362  in Trigano SA on August 31, 2024 and sell it today you would earn a total of  1,718  from holding Trigano SA or generate 16.58% return on investment over 90 days.

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

Derichebourg  vs.  Trigano 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 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.

Trigano SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Derichebourg and Trigano SA

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

The idea behind Derichebourg and Trigano 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.