Correlation Between Moncler SpA and H M

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

By analyzing existing cross correlation between Moncler SpA and H M Hennes, you can compare the effects of market volatilities on Moncler SpA and H M 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 Moncler SpA with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moncler SpA and H M.

Diversification Opportunities for Moncler SpA and H M

0.71

Correlation Coefficient

Moncler SpA  H M

Poor diversification

The 3 months correlation between Moncler and HMRZF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Moncler SpA and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and Moncler SpA 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 Moncler SpA are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of Moncler SpA i.e., Moncler SpA and H M go up and down completely randomly.

Pair Corralation between Moncler SpA and H M

Assuming the 90 days horizon Moncler SpA is expected to under-perform the H M. In addition to that, Moncler SpA is 1.32 times more volatile than H M Hennes. It trades about -0.09 of its total potential returns per unit of risk. H M Hennes is currently generating about -0.03 per unit of volatility. If you would invest  1,586  in H M Hennes on September 2, 2024 and sell it today you would lose (108.00) from holding H M Hennes or give up 6.81% of portfolio value over 90 days.

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

Moncler SpA  vs.  H M Hennes

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

H M Hennes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H M is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Moncler SpA and H M

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

The idea behind Moncler SpA and H M Hennes 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.