Correlation Between Glencore PLC and Compagnie Financire

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

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

Diversification Opportunities for Glencore PLC and Compagnie Financire

0.26

Correlation Coefficient

Glencore PLC  Compagnie Financire

Modest diversification

The 3 months correlation between Glencore and Compagnie is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire and Glencore PLC 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 Glencore PLC are associated (or correlated) with Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of Glencore PLC i.e., Glencore PLC and Compagnie Financire go up and down completely randomly.

Pair Corralation between Glencore PLC and Compagnie Financire

Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the Compagnie Financire. In addition to that, Glencore PLC is 1.0 times more volatile than Compagnie Financire Richemont. It trades about -0.02 of its total potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.03 per unit of volatility. If you would invest  21,968,200  in Compagnie Financire Richemont on September 24, 2024 and sell it today you would earn a total of  5,558,700  from holding Compagnie Financire Richemont or generate 25.3% return on investment over 90 days.

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

Glencore PLC  vs.  Compagnie Financire Richemont

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Compagnie Financire

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Compagnie Financire may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Glencore PLC and Compagnie Financire

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

The idea behind Glencore PLC and Compagnie Financire Richemont 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.