Correlation Between Malteries Franco and Vente Unique

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

By analyzing existing cross correlation between Malteries Franco Belges Socit and Vente Unique, you can compare the effects of market volatilities on Malteries Franco and Vente Unique 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 Malteries Franco with a short position of Vente Unique. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malteries Franco and Vente Unique.

Diversification Opportunities for Malteries Franco and Vente Unique

-0.37

Correlation Coefficient

Malteries Franco  Vente Unique

Very good diversification

The 3 months correlation between Malteries and Vente is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Malteries Franco Belges Socit and Vente Unique in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vente Unique and Malteries Franco 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 Malteries Franco Belges Socit are associated (or correlated) with Vente Unique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vente Unique has no effect on the direction of Malteries Franco i.e., Malteries Franco and Vente Unique go up and down completely randomly.

Pair Corralation between Malteries Franco and Vente Unique

Assuming the 90 days trading horizon Malteries Franco Belges Socit is expected to generate 0.77 times more return on investment than Vente Unique. However, Malteries Franco Belges Socit is 1.3 times less risky than Vente Unique. It trades about 0.01 of its potential returns per unit of risk. Vente Unique is currently generating about -0.15 per unit of risk. If you would invest  74,000  in Malteries Franco Belges Socit on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Malteries Franco Belges Socit or generate 0.0% return on investment over 90 days.

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

Malteries Franco Belges Socit  vs.  Vente Unique

Malteries Franco Belges

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Malteries Franco Belges Socit are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malteries Franco sustained solid returns over the last few months and may actually be approaching a breakup point.

Vente Unique

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vente Unique are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vente Unique is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Malteries Franco and Vente Unique

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

The idea behind Malteries Franco Belges Socit and Vente Unique 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.