Correlation Between Prodways Group and Publicis Groupe

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

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

Diversification Opportunities for Prodways Group and Publicis Groupe

-0.46

Correlation Coefficient

Prodways Group  Publicis Groupe

Very good diversification

The 3 months correlation between Prodways and Publicis is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and Prodways Group 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 Prodways Group SA are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Prodways Group i.e., Prodways Group and Publicis Groupe go up and down completely randomly.

Pair Corralation between Prodways Group and Publicis Groupe

Assuming the 90 days trading horizon Prodways Group SA is expected to under-perform the Publicis Groupe. In addition to that, Prodways Group is 1.58 times more volatile than Publicis Groupe SA. It trades about -0.09 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.08 per unit of volatility. If you would invest  9,604  in Publicis Groupe SA on September 5, 2024 and sell it today you would earn a total of  681.00  from holding Publicis Groupe SA or generate 7.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Prodways Group SA  vs.  Publicis Groupe SA

Prodways Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prodways Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Publicis Groupe SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Publicis Groupe SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Publicis Groupe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Prodways Group and Publicis Groupe

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

The idea behind Prodways Group SA and Publicis Groupe 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.