Correlation Between Publicis Groupe and De Grey

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

Diversification Opportunities for Publicis Groupe and De Grey

0.58

Correlation Coefficient

Publicis Groupe  De Grey

Very weak diversification

The 3 months correlation between Publicis and DGD is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and De Grey go up and down completely randomly.

Pair Corralation between Publicis Groupe and De Grey

Assuming the 90 days horizon Publicis Groupe SA is expected to generate 0.45 times more return on investment than De Grey. However, Publicis Groupe SA is 2.22 times less risky than De Grey. It trades about 0.08 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.02 per unit of risk. If you would invest  5,740  in Publicis Groupe SA on October 11, 2024 and sell it today you would earn a total of  4,158  from holding Publicis Groupe SA or generate 72.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Publicis Groupe SA  vs.  De Grey Mining

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

De Grey Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Publicis Groupe and De Grey

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

The idea behind Publicis Groupe SA and De Grey Mining 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.