Correlation Between ID Logistics and Chargeurs

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

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

Diversification Opportunities for ID Logistics and Chargeurs

-0.32

Correlation Coefficient

ID Logistics  Chargeurs

Very good diversification

The 3 months correlation between IDL and Chargeurs is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ID Logistics Group and Chargeurs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chargeurs SA and ID Logistics 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 ID Logistics Group are associated (or correlated) with Chargeurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chargeurs SA has no effect on the direction of ID Logistics i.e., ID Logistics and Chargeurs go up and down completely randomly.

Pair Corralation between ID Logistics and Chargeurs

Assuming the 90 days trading horizon ID Logistics Group is expected to generate 0.89 times more return on investment than Chargeurs. However, ID Logistics Group is 1.12 times less risky than Chargeurs. It trades about -0.04 of its potential returns per unit of risk. Chargeurs SA is currently generating about -0.17 per unit of risk. If you would invest  41,450  in ID Logistics Group on August 31, 2024 and sell it today you would lose (2,250) from holding ID Logistics Group or give up 5.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

ID Logistics Group  vs.  Chargeurs SA

ID Logistics Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA 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 forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ID Logistics and Chargeurs

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

The idea behind ID Logistics Group and Chargeurs 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.