Correlation Between Compagnie and Made SA

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

By analyzing existing cross correlation between Compagnie Du Mont Blanc and Made SA, you can compare the effects of market volatilities on Compagnie and Made 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 Made SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Made SA.

Diversification Opportunities for Compagnie and Made SA

-0.36

Correlation Coefficient

Compagnie  Made SA

Very good diversification

The 3 months correlation between Compagnie and Made is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Du Mont Blanc and Made SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made 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 Du Mont Blanc are associated (or correlated) with Made SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made SA has no effect on the direction of Compagnie i.e., Compagnie and Made SA go up and down completely randomly.

Pair Corralation between Compagnie and Made SA

Assuming the 90 days trading horizon Compagnie is expected to generate 3.73 times less return on investment than Made SA. But when comparing it to its historical volatility, Compagnie Du Mont Blanc is 5.01 times less risky than Made SA. It trades about 0.08 of its potential returns per unit of risk. Made SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  877.00  in Made SA on December 24, 2024 and sell it today you would earn a total of  103.00  from holding Made SA or generate 11.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

Compagnie Du Mont Blanc  vs.  Made SA

Compagnie Du Mont

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Du Mont Blanc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Compagnie is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Made SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Made SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Made SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie and Made SA

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

The idea behind Compagnie Du Mont Blanc and Made 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.