Correlation Between Pernod Ricard and CARSALESCOM

Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM, you can compare the effects of market volatilities on Pernod Ricard and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and CARSALESCOM.

Diversification Opportunities for Pernod Ricard and CARSALESCOM

-0.52

Correlation Coefficient

Pernod Ricard  CARSALESCOM

Excellent diversification

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

Pair Corralation between Pernod Ricard and CARSALESCOM

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the CARSALESCOM. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 1.13 times less risky than CARSALESCOM. The stock trades about -0.06 of its potential returns per unit of risk. The CARSALESCOM is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,338  in CARSALESCOM on October 11, 2024 and sell it today you would earn a total of  922.00  from holding CARSALESCOM or generate 68.91% return on investment over 90 days.

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

Pernod Ricard SA  vs.  CARSALESCOM

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Pernod Ricard and CARSALESCOM

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

The idea behind Pernod Ricard SA and CARSALESCOM 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.