Correlation Between Robertet and Pernod Ricard

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

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

Diversification Opportunities for Robertet and Pernod Ricard

0.66

Correlation Coefficient

Robertet  Pernod Ricard

Poor diversification

The 3 months correlation between Robertet and Pernod is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Robertet SA and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA and Robertet 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 Robertet SA are associated (or correlated) with Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Robertet i.e., Robertet and Pernod Ricard go up and down completely randomly.

Pair Corralation between Robertet and Pernod Ricard

Assuming the 90 days trading horizon Robertet SA is expected to generate 0.88 times more return on investment than Pernod Ricard. However, Robertet SA is 1.14 times less risky than Pernod Ricard. It trades about 0.01 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.06 per unit of risk. If you would invest  81,700  in Robertet SA on September 23, 2024 and sell it today you would earn a total of  3,200  from holding Robertet SA or generate 3.92% return on investment over 90 days.

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

Robertet SA  vs.  Pernod Ricard SA

Robertet SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pernod Ricard 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 basic 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.

Pair Trading with Robertet and Pernod Ricard

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

The idea behind Robertet SA and Pernod Ricard 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.