Correlation Between KERINGUNSPADR 110 and CHRISTIAN DIOR

Can any of the company-specific risk be diversified away by investing in both KERINGUNSPADR 110 and CHRISTIAN DIOR 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 KERINGUNSPADR 110 and CHRISTIAN DIOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KERINGUNSPADR 110 EO and CHRISTIAN DIOR ADR14EO2, you can compare the effects of market volatilities on KERINGUNSPADR 110 and CHRISTIAN DIOR 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 KERINGUNSPADR 110 with a short position of CHRISTIAN DIOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KERINGUNSPADR 110 and CHRISTIAN DIOR.

Diversification Opportunities for KERINGUNSPADR 110 and CHRISTIAN DIOR

0.88

Correlation Coefficient

KERINGUNSPADR 110  CHRISTIAN DIOR

Very poor diversification

The 3 months correlation between KERINGUNSPADR and CHRISTIAN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KERINGUNSPADR 110 EO and CHRISTIAN DIOR ADR14EO2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRISTIAN DIOR ADR14EO2 and KERINGUNSPADR 110 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 KERINGUNSPADR 110 EO are associated (or correlated) with CHRISTIAN DIOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRISTIAN DIOR ADR14EO2 has no effect on the direction of KERINGUNSPADR 110 i.e., KERINGUNSPADR 110 and CHRISTIAN DIOR go up and down completely randomly.

Pair Corralation between KERINGUNSPADR 110 and CHRISTIAN DIOR

Assuming the 90 days trading horizon KERINGUNSPADR 110 EO is expected to under-perform the CHRISTIAN DIOR. In addition to that, KERINGUNSPADR 110 is 1.77 times more volatile than CHRISTIAN DIOR ADR14EO2. It trades about -0.02 of its total potential returns per unit of risk. CHRISTIAN DIOR ADR14EO2 is currently generating about 0.0 per unit of volatility. If you would invest  15,916  in CHRISTIAN DIOR ADR14EO2 on September 23, 2024 and sell it today you would lose (1,416) from holding CHRISTIAN DIOR ADR14EO2 or give up 8.9% of portfolio value over 90 days.

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

KERINGUNSPADR 110 EO  vs.  CHRISTIAN DIOR ADR14EO2

KERINGUNSPADR 110

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KERINGUNSPADR 110 EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KERINGUNSPADR 110 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CHRISTIAN DIOR ADR14EO2

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHRISTIAN DIOR ADR14EO2 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHRISTIAN DIOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KERINGUNSPADR 110 and CHRISTIAN DIOR

The main advantage of trading using opposite KERINGUNSPADR 110 and CHRISTIAN DIOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KERINGUNSPADR 110 position performs unexpectedly, CHRISTIAN DIOR 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 CHRISTIAN DIOR will offset losses from the drop in CHRISTIAN DIOR's long position.

The idea behind KERINGUNSPADR 110 EO and CHRISTIAN DIOR ADR14EO2 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.