Correlation Between Compagnie and Deezer SA

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

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

Diversification Opportunities for Compagnie and Deezer SA

-0.61

Correlation Coefficient

Compagnie  Deezer SA

Excellent diversification

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

Pair Corralation between Compagnie and Deezer SA

Assuming the 90 days trading horizon Compagnie de Chemins is expected to generate 1.04 times more return on investment than Deezer SA. However, Compagnie is 1.04 times more volatile than Deezer SA. It trades about 0.07 of its potential returns per unit of risk. Deezer SA is currently generating about -0.08 per unit of risk. If you would invest  84,000  in Compagnie de Chemins on October 15, 2024 and sell it today you would earn a total of  8,000  from holding Compagnie de Chemins or generate 9.52% return on investment over 90 days.

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

Compagnie de Chemins  vs.  Deezer SA

Compagnie de Chemins

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Deezer SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deezer 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 Compagnie and Deezer SA

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

The idea behind Compagnie de Chemins and Deezer 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.