Correlation Between Publicis Groupe and Imerys SA

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

Diversification Opportunities for Publicis Groupe and Imerys SA

-0.73

Correlation Coefficient

Publicis Groupe  Imerys SA

Pay attention - limited upside

The 3 months correlation between Publicis and Imerys is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Imerys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imerys SA 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 Imerys SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imerys SA has no effect on the direction of Publicis Groupe i.e., Publicis Groupe and Imerys SA go up and down completely randomly.

Pair Corralation between Publicis Groupe and Imerys SA

Assuming the 90 days trading horizon Publicis Groupe SA is expected to under-perform the Imerys SA. But the stock apears to be less risky and, when comparing its historical volatility, Publicis Groupe SA is 1.98 times less risky than Imerys SA. The stock trades about -0.13 of its potential returns per unit of risk. The Imerys SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,772  in Imerys SA on December 30, 2024 and sell it today you would earn a total of  358.00  from holding Imerys SA or generate 12.91% return on investment over 90 days.

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

Publicis Groupe SA  vs.  Imerys SA

Publicis Groupe SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Imerys SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imerys SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imerys SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Publicis Groupe and Imerys SA

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

The idea behind Publicis Groupe SA and Imerys SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.