Correlation Between Malteries Franco and Hermes International

Can any of the company-specific risk be diversified away by investing in both Malteries Franco and Hermes International 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 Hermes International 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 Hermes International SCA, you can compare the effects of market volatilities on Malteries Franco and Hermes International 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 Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malteries Franco and Hermes International.

Diversification Opportunities for Malteries Franco and Hermes International

0.01

Correlation Coefficient

Malteries Franco  Hermes International

Significant diversification

The 3 months correlation between Malteries and Hermes is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Malteries Franco Belges Socit and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA 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 Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Malteries Franco i.e., Malteries Franco and Hermes International go up and down completely randomly.

Pair Corralation between Malteries Franco and Hermes International

Assuming the 90 days trading horizon Malteries Franco Belges Socit is expected to generate 1.39 times more return on investment than Hermes International. However, Malteries Franco is 1.39 times more volatile than Hermes International SCA. It trades about 0.09 of its potential returns per unit of risk. Hermes International SCA is currently generating about 0.07 per unit of risk. If you would invest  77,656  in Malteries Franco Belges Socit on December 29, 2024 and sell it today you would earn a total of  8,344  from holding Malteries Franco Belges Socit or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Malteries Franco Belges Socit  vs.  Hermes International SCA

Malteries Franco Belges

Risk-Adjusted Performance

Modest

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

Hermes International SCA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hermes International SCA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hermes International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Malteries Franco and Hermes International

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

The idea behind Malteries Franco Belges Socit and Hermes International SCA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.