Correlation Between Valeo SA and Casino Guichard

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

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

Diversification Opportunities for Valeo SA and Casino Guichard

0.78

Correlation Coefficient

Valeo SA  Casino Guichard

Poor diversification

The 3 months correlation between Valeo and Casino is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SA and Casino Guichard Perrachon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casino Guichard Perrachon and Valeo 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 Valeo SA are associated (or correlated) with Casino Guichard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casino Guichard Perrachon has no effect on the direction of Valeo SA i.e., Valeo SA and Casino Guichard go up and down completely randomly.

Pair Corralation between Valeo SA and Casino Guichard

Assuming the 90 days horizon Valeo SA is expected to generate 0.41 times more return on investment than Casino Guichard. However, Valeo SA is 2.46 times less risky than Casino Guichard. It trades about -0.08 of its potential returns per unit of risk. Casino Guichard Perrachon is currently generating about -0.26 per unit of risk. If you would invest  1,004  in Valeo SA on September 13, 2024 and sell it today you would lose (110.00) from holding Valeo SA or give up 10.96% of portfolio value over 90 days.

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

Valeo SA  vs.  Casino Guichard Perrachon

Valeo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Valeo SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Casino Guichard Perrachon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casino Guichard Perrachon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Valeo SA and Casino Guichard

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

The idea behind Valeo SA and Casino Guichard Perrachon 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.