Correlation Between Exel Industries and Interparfums

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

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

Diversification Opportunities for Exel Industries and Interparfums

0.55

Correlation Coefficient

Exel Industries  Interparfums

Very weak diversification

The 3 months correlation between Exel and Interparfums is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Exel Industries and Interparfums SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interparfums SA and Exel Industries 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 Exel Industries are associated (or correlated) with Interparfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interparfums SA has no effect on the direction of Exel Industries i.e., Exel Industries and Interparfums go up and down completely randomly.

Pair Corralation between Exel Industries and Interparfums

Assuming the 90 days trading horizon Exel Industries is expected to under-perform the Interparfums. But the stock apears to be less risky and, when comparing its historical volatility, Exel Industries is 1.55 times less risky than Interparfums. The stock trades about -0.37 of its potential returns per unit of risk. The Interparfums SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  4,190  in Interparfums SA on September 1, 2024 and sell it today you would lose (235.00) from holding Interparfums SA or give up 5.61% of portfolio value over 90 days.

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

Exel Industries  vs.  Interparfums SA

Exel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exel Industries 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.

Interparfums SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interparfums 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.

Pair Trading with Exel Industries and Interparfums

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

The idea behind Exel Industries and Interparfums 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 Commodity Directory module to find actively traded commodities issued by global exchanges.