Correlation Between Compagnie Industrielle and Vinci SA

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

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

Diversification Opportunities for Compagnie Industrielle and Vinci SA

-0.21

Correlation Coefficient

Compagnie Industrielle  Vinci SA

Very good diversification

The 3 months correlation between Compagnie and Vinci is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Industrielle et and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA and Compagnie Industrielle 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 Compagnie Industrielle et are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Compagnie Industrielle i.e., Compagnie Industrielle and Vinci SA go up and down completely randomly.

Pair Corralation between Compagnie Industrielle and Vinci SA

Assuming the 90 days trading horizon Compagnie Industrielle et is expected to under-perform the Vinci SA. In addition to that, Compagnie Industrielle is 2.14 times more volatile than Vinci SA. It trades about -0.04 of its total potential returns per unit of risk. Vinci SA is currently generating about 0.27 per unit of volatility. If you would invest  9,872  in Vinci SA on December 30, 2024 and sell it today you would earn a total of  1,998  from holding Vinci SA or generate 20.24% return on investment over 90 days.

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

Compagnie Industrielle et  vs.  Vinci SA

Compagnie Industrielle

Risk-Adjusted Performance

Very Weak

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

Vinci SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vinci SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Industrielle and Vinci SA

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

The idea behind Compagnie Industrielle et and Vinci 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.