Correlation Between JCDecaux and WIMFARM SA

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

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

Diversification Opportunities for JCDecaux and WIMFARM SA

0.27

Correlation Coefficient

JCDecaux  WIMFARM SA

Modest diversification

The 3 months correlation between JCDecaux and WIMFARM is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JCDecaux SA and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and JCDecaux 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 JCDecaux SA are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of JCDecaux i.e., JCDecaux and WIMFARM SA go up and down completely randomly.

Pair Corralation between JCDecaux and WIMFARM SA

Assuming the 90 days horizon JCDecaux is expected to generate 2.34 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, JCDecaux SA is 2.44 times less risky than WIMFARM SA. It trades about 0.1 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  315.00  in WIMFARM SA EO on December 22, 2024 and sell it today you would earn a total of  85.00  from holding WIMFARM SA EO or generate 26.98% return on investment over 90 days.

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

JCDecaux SA  vs.  WIMFARM SA EO

JCDecaux SA

Risk-Adjusted Performance

OK

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

WIMFARM SA EO

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JCDecaux and WIMFARM SA

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

The idea behind JCDecaux SA and WIMFARM SA EO 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.