Correlation Between Groupe Partouche and Hotel Majestic

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

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

Diversification Opportunities for Groupe Partouche and Hotel Majestic

-0.72

Correlation Coefficient

Groupe Partouche  Hotel Majestic

Pay attention - limited upside

The 3 months correlation between Groupe and Hotel is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Groupe Partouche SA and Hotel Majestic Cannes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Majestic Cannes and Groupe Partouche 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 Groupe Partouche SA are associated (or correlated) with Hotel Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Majestic Cannes has no effect on the direction of Groupe Partouche i.e., Groupe Partouche and Hotel Majestic go up and down completely randomly.

Pair Corralation between Groupe Partouche and Hotel Majestic

Assuming the 90 days trading horizon Groupe Partouche SA is expected to generate 1.2 times more return on investment than Hotel Majestic. However, Groupe Partouche is 1.2 times more volatile than Hotel Majestic Cannes. It trades about 0.04 of its potential returns per unit of risk. Hotel Majestic Cannes is currently generating about -0.04 per unit of risk. If you would invest  2,010  in Groupe Partouche SA on September 13, 2024 and sell it today you would earn a total of  80.00  from holding Groupe Partouche SA or generate 3.98% return on investment over 90 days.

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

Groupe Partouche SA  vs.  Hotel Majestic Cannes

Groupe Partouche

Risk-Adjusted Performance

3 of 100

Insignificant

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

Hotel Majestic Cannes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Majestic Cannes has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hotel Majestic is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Groupe Partouche and Hotel Majestic

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

The idea behind Groupe Partouche SA and Hotel Majestic Cannes 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.