Correlation Between CMG Cleantech and Groupe Sfpi

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

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

Diversification Opportunities for CMG Cleantech and Groupe Sfpi

0.18

Correlation Coefficient

CMG Cleantech  Groupe Sfpi

Average diversification

The 3 months correlation between CMG and Groupe is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and Groupe Sfpi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Sfpi and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with Groupe Sfpi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Sfpi has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and Groupe Sfpi go up and down completely randomly.

Pair Corralation between CMG Cleantech and Groupe Sfpi

Assuming the 90 days trading horizon CMG Cleantech SA is expected to generate 1.72 times more return on investment than Groupe Sfpi. However, CMG Cleantech is 1.72 times more volatile than Groupe Sfpi. It trades about 0.15 of its potential returns per unit of risk. Groupe Sfpi is currently generating about 0.03 per unit of risk. If you would invest  100.00  in CMG Cleantech SA on September 13, 2024 and sell it today you would earn a total of  28.00  from holding CMG Cleantech SA or generate 28.0% return on investment over 90 days.

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

CMG Cleantech SA  vs.  Groupe Sfpi

CMG Cleantech SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Cleantech SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CMG Cleantech reported solid returns over the last few months and may actually be approaching a breakup point.

Groupe Sfpi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Groupe Sfpi is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CMG Cleantech and Groupe Sfpi

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

The idea behind CMG Cleantech SA and Groupe Sfpi 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.