Correlation Between Publicis Groupe and CyberAgent

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

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

Diversification Opportunities for Publicis Groupe and CyberAgent

0.61

Correlation Coefficient

Publicis Groupe  CyberAgent

Poor diversification

The 3 months correlation between Publicis and CyberAgent is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent and Publicis Groupe 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 Publicis Groupe SA are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and CyberAgent go up and down completely randomly.

Pair Corralation between Publicis Groupe and CyberAgent

Assuming the 90 days horizon Publicis Groupe SA is expected to generate 0.6 times more return on investment than CyberAgent. However, Publicis Groupe SA is 1.68 times less risky than CyberAgent. It trades about 0.09 of its potential returns per unit of risk. CyberAgent is currently generating about 0.0 per unit of risk. If you would invest  5,479  in Publicis Groupe SA on September 24, 2024 and sell it today you would earn a total of  4,761  from holding Publicis Groupe SA or generate 86.9% return on investment over 90 days.

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

Publicis Groupe SA  vs.  CyberAgent

Publicis Groupe SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CyberAgent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CyberAgent is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Publicis Groupe and CyberAgent

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

The idea behind Publicis Groupe SA and CyberAgent 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.