Correlation Between Groupe JAJ and ST Dupont

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

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

Diversification Opportunities for Groupe JAJ and ST Dupont

-0.48

Correlation Coefficient

Groupe JAJ  ST Dupont

Very good diversification

The 3 months correlation between Groupe and DPT is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Groupe JAJ and ST Dupont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Dupont and Groupe JAJ 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 Groupe JAJ are associated (or correlated) with ST Dupont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Dupont has no effect on the direction of Groupe JAJ i.e., Groupe JAJ and ST Dupont go up and down completely randomly.

Pair Corralation between Groupe JAJ and ST Dupont

Assuming the 90 days trading horizon Groupe JAJ is expected to generate 1.71 times less return on investment than ST Dupont. In addition to that, Groupe JAJ is 4.33 times more volatile than ST Dupont. It trades about 0.03 of its total potential returns per unit of risk. ST Dupont is currently generating about 0.21 per unit of volatility. If you would invest  5.82  in ST Dupont on September 16, 2024 and sell it today you would earn a total of  2.12  from holding ST Dupont or generate 36.43% return on investment over 90 days.

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

Groupe JAJ  vs.  ST Dupont

Groupe JAJ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe JAJ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe JAJ sustained solid returns over the last few months and may actually be approaching a breakup point.

ST Dupont

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ST Dupont are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ST Dupont sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Groupe JAJ and ST Dupont

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

The idea behind Groupe JAJ and ST Dupont 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.