Correlation Between NRJ and Television Francaise

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

By analyzing existing cross correlation between NRJ Group and Television Francaise 1, you can compare the effects of market volatilities on NRJ and Television Francaise 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 NRJ with a short position of Television Francaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRJ and Television Francaise.

Diversification Opportunities for NRJ and Television Francaise

-0.52

Correlation Coefficient

NRJ  Television Francaise

Excellent diversification

The 3 months correlation between NRJ and Television is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NRJ Group and Television Francaise 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Television Francaise and NRJ 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 NRJ Group are associated (or correlated) with Television Francaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Television Francaise has no effect on the direction of NRJ i.e., NRJ and Television Francaise go up and down completely randomly.

Pair Corralation between NRJ and Television Francaise

Assuming the 90 days trading horizon NRJ Group is expected to under-perform the Television Francaise. In addition to that, NRJ is 1.12 times more volatile than Television Francaise 1. It trades about -0.04 of its total potential returns per unit of risk. Television Francaise 1 is currently generating about 0.31 per unit of volatility. If you would invest  724.00  in Television Francaise 1 on December 30, 2024 and sell it today you would earn a total of  175.00  from holding Television Francaise 1 or generate 24.17% return on investment over 90 days.

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

NRJ Group  vs.  Television Francaise 1

NRJ Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, NRJ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Television Francaise

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Television Francaise 1 are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Television Francaise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NRJ and Television Francaise

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

The idea behind NRJ Group and Television Francaise 1 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.