Correlation Between Vinci SA and Compagnie Industrielle

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

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

Diversification Opportunities for Vinci SA and Compagnie Industrielle

-0.69

Correlation Coefficient

Vinci SA  Compagnie Industrielle

Excellent diversification

The 3 months correlation between Vinci and Compagnie is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA and Compagnie Industrielle et in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Industrielle and Vinci SA 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 Vinci SA are associated (or correlated) with Compagnie Industrielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Industrielle has no effect on the direction of Vinci SA i.e., Vinci SA and Compagnie Industrielle go up and down completely randomly.

Pair Corralation between Vinci SA and Compagnie Industrielle

Assuming the 90 days horizon Vinci SA is expected to under-perform the Compagnie Industrielle. But the stock apears to be less risky and, when comparing its historical volatility, Vinci SA is 1.36 times less risky than Compagnie Industrielle. The stock trades about -0.08 of its potential returns per unit of risk. The Compagnie Industrielle et is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,050  in Compagnie Industrielle et on September 13, 2024 and sell it today you would earn a total of  1,050  from holding Compagnie Industrielle et or generate 20.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Vinci SA  vs.  Compagnie Industrielle et

Vinci SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Compagnie Industrielle

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Industrielle et are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Industrielle sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vinci SA and Compagnie Industrielle

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

The idea behind Vinci SA and Compagnie Industrielle et 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.