Correlation Between Pernod Ricard and Safran SA

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

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

Diversification Opportunities for Pernod Ricard and Safran SA

-0.57

Correlation Coefficient

Pernod Ricard  Safran SA

Excellent diversification

The 3 months correlation between Pernod and Safran is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Safran SA go up and down completely randomly.

Pair Corralation between Pernod Ricard and Safran SA

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Safran SA. In addition to that, Pernod Ricard is 1.34 times more volatile than Safran SA. It trades about -0.14 of its total potential returns per unit of risk. Safran SA is currently generating about 0.17 per unit of volatility. If you would invest  19,440  in Safran SA on September 3, 2024 and sell it today you would earn a total of  2,740  from holding Safran SA or generate 14.09% return on investment over 90 days.

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

Pernod Ricard SA  vs.  Safran SA

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.

Safran SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Safran SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Safran SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pernod Ricard and Safran SA

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

The idea behind Pernod Ricard SA and Safran 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.