Correlation Between Hermès International and Pandora A/S

Can any of the company-specific risk be diversified away by investing in both Hermès International and Pandora A/S 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 Hermès International and Pandora A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Herms International Socit and Pandora AS, you can compare the effects of market volatilities on Hermès International and Pandora A/S 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 Hermès International with a short position of Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermès International and Pandora A/S.

Diversification Opportunities for Hermès International and Pandora A/S

0.0

Correlation Coefficient

Hermès International  Pandora A/S

Pay attention - limited upside

The 3 months correlation between Hermès and Pandora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S and Hermès International 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 Herms International Socit are associated (or correlated) with Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Hermès International i.e., Hermès International and Pandora A/S go up and down completely randomly.

Pair Corralation between Hermès International and Pandora A/S

If you would invest  14,130  in Pandora AS on October 4, 2024 and sell it today you would earn a total of  3,565  from holding Pandora AS or generate 25.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Herms International Socit  vs.  Pandora AS

Herms International Socit

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Herms International Socit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hermès International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pandora A/S

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pandora A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hermès International and Pandora A/S

The main advantage of trading using opposite Hermès International and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermès International position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.

The idea behind Herms International Socit and Pandora AS 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.