Correlation Between Mtropole Tlvision and JC Decaux

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

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

Diversification Opportunities for Mtropole Tlvision and JC Decaux

0.6

Correlation Coefficient

Mtropole Tlvision  JC Decaux

Poor diversification

The 3 months correlation between Mtropole and DEC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mtropole Tlvision SA and JC Decaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Decaux SA and Mtropole Tlvision 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 Mtropole Tlvision SA are associated (or correlated) with JC Decaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Decaux SA has no effect on the direction of Mtropole Tlvision i.e., Mtropole Tlvision and JC Decaux go up and down completely randomly.

Pair Corralation between Mtropole Tlvision and JC Decaux

Assuming the 90 days trading horizon Mtropole Tlvision SA is expected to generate 0.4 times more return on investment than JC Decaux. However, Mtropole Tlvision SA is 2.48 times less risky than JC Decaux. It trades about 0.39 of its potential returns per unit of risk. JC Decaux SA is currently generating about 0.04 per unit of risk. If you would invest  1,110  in Mtropole Tlvision SA on December 30, 2024 and sell it today you would earn a total of  302.00  from holding Mtropole Tlvision SA or generate 27.21% return on investment over 90 days.

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

Mtropole Tlvision SA  vs.  JC Decaux SA

Mtropole Tlvision

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Mtropole Tlvision SA are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mtropole Tlvision sustained solid returns over the last few months and may actually be approaching a breakup point.

JC Decaux SA

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Mtropole Tlvision and JC Decaux

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

The idea behind Mtropole Tlvision SA and JC Decaux 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.