Correlation Between Bank Ozk and Compagnie Financiere

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

By analyzing existing cross correlation between Bank Ozk and Compagnie Financiere Richemont, you can compare the effects of market volatilities on Bank Ozk and Compagnie Financiere 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 Bank Ozk with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ozk and Compagnie Financiere.

Diversification Opportunities for Bank Ozk and Compagnie Financiere

0.63

Correlation Coefficient

Bank Ozk  Compagnie Financiere

Poor diversification

The 3 months correlation between Bank and Compagnie is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Bank Ozk 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 Bank Ozk are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Bank Ozk i.e., Bank Ozk and Compagnie Financiere go up and down completely randomly.

Pair Corralation between Bank Ozk and Compagnie Financiere

Considering the 90-day investment horizon Bank Ozk is expected to generate 67.24 times less return on investment than Compagnie Financiere. But when comparing it to its historical volatility, Bank Ozk is 1.15 times less risky than Compagnie Financiere. It trades about 0.0 of its potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,418  in Compagnie Financiere Richemont on December 1, 2024 and sell it today you would earn a total of  617.00  from holding Compagnie Financiere Richemont or generate 43.51% return on investment over 90 days.

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

Bank Ozk  vs.  Compagnie Financiere Richemont

Bank Ozk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Ozk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bank Ozk is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Compagnie Financiere

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financiere Richemont are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Compagnie Financiere showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Ozk and Compagnie Financiere

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

The idea behind Bank Ozk and Compagnie Financiere Richemont 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .