Correlation Between Interparfums and Agripower France

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

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

Diversification Opportunities for Interparfums and Agripower France

0.5

Correlation Coefficient

Interparfums  Agripower France

Very weak diversification

The 3 months correlation between Interparfums and Agripower is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and Agripower France Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agripower France and Interparfums 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 Interparfums SA are associated (or correlated) with Agripower France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agripower France has no effect on the direction of Interparfums i.e., Interparfums and Agripower France go up and down completely randomly.

Pair Corralation between Interparfums and Agripower France

Assuming the 90 days trading horizon Interparfums SA is expected to under-perform the Agripower France. But the stock apears to be less risky and, when comparing its historical volatility, Interparfums SA is 1.03 times less risky than Agripower France. The stock trades about -0.08 of its potential returns per unit of risk. The Agripower France Sa is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Agripower France Sa on September 1, 2024 and sell it today you would lose (11.00) from holding Agripower France Sa or give up 11.11% of portfolio value over 90 days.

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

Interparfums SA  vs.  Agripower France Sa

Interparfums SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interparfums SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Agripower France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agripower France Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Interparfums and Agripower France

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

The idea behind Interparfums SA and Agripower France 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.