Correlation Between Interparfums and La Savonnerie

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

By analyzing existing cross correlation between Interparfums SA and La Savonnerie de, you can compare the effects of market volatilities on Interparfums and La Savonnerie 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 La Savonnerie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interparfums and La Savonnerie.

Diversification Opportunities for Interparfums and La Savonnerie

-0.61

Correlation Coefficient

Interparfums  La Savonnerie

Excellent diversification

The 3 months correlation between Interparfums and MLSDN is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and La Savonnerie de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Savonnerie de 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 La Savonnerie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Savonnerie de has no effect on the direction of Interparfums i.e., Interparfums and La Savonnerie go up and down completely randomly.

Pair Corralation between Interparfums and La Savonnerie

Assuming the 90 days trading horizon Interparfums SA is expected to under-perform the La Savonnerie. But the stock apears to be less risky and, when comparing its historical volatility, Interparfums SA is 2.09 times less risky than La Savonnerie. The stock trades about -0.07 of its potential returns per unit of risk. The La Savonnerie de is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,800  in La Savonnerie de on September 3, 2024 and sell it today you would earn a total of  180.00  from holding La Savonnerie de or generate 6.43% return on investment over 90 days.

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

Interparfums SA  vs.  La Savonnerie de

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.

La Savonnerie de

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in La Savonnerie de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, La Savonnerie reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interparfums and La Savonnerie

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

The idea behind Interparfums SA and La Savonnerie de 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.