Correlation Between Maat Pharma and Compagnie

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

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

Diversification Opportunities for Maat Pharma and Compagnie

0.68

Correlation Coefficient

Maat Pharma  Compagnie

Poor diversification

The 3 months correlation between Maat and Compagnie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Maat Pharma SA and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and Maat Pharma 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 Maat Pharma SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Maat Pharma i.e., Maat Pharma and Compagnie go up and down completely randomly.

Pair Corralation between Maat Pharma and Compagnie

Assuming the 90 days trading horizon Maat Pharma SA is expected to generate 1.28 times more return on investment than Compagnie. However, Maat Pharma is 1.28 times more volatile than Compagnie de Saint Gobain. It trades about 0.08 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.09 per unit of risk. If you would invest  730.00  in Maat Pharma SA on September 2, 2024 and sell it today you would earn a total of  64.00  from holding Maat Pharma SA or generate 8.77% return on investment over 90 days.

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

Maat Pharma SA  vs.  Compagnie de Saint Gobain

Maat Pharma SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Compagnie de Saint

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maat Pharma and Compagnie

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

The idea behind Maat Pharma SA and Compagnie de Saint Gobain 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.