Correlation Between Pernod Ricard and Romana Food

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

By analyzing existing cross correlation between Pernod Ricard SA and Romana Food Brands, you can compare the effects of market volatilities on Pernod Ricard and Romana Food 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 Pernod Ricard with a short position of Romana Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Romana Food.

Diversification Opportunities for Pernod Ricard and Romana Food

0.0

Correlation Coefficient

Pernod Ricard  Romana Food

Pay attention - limited upside

The 3 months correlation between Pernod and Romana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Romana Food Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romana Food Brands and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Romana Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romana Food Brands has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Romana Food go up and down completely randomly.

Pair Corralation between Pernod Ricard and Romana Food

If you would invest  0.01  in Romana Food Brands on December 20, 2024 and sell it today you would lose  0.00  from holding Romana Food Brands or give up 0.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pernod Ricard SA  vs.  Romana Food Brands

Pernod Ricard SA

Risk-Adjusted Performance

Very Weak

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

Romana Food Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Romana Food Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Romana Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pernod Ricard and Romana Food

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

The idea behind Pernod Ricard SA and Romana Food Brands 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.