Correlation Between REINET INVESTMENTS and Pernod Ricard

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

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

Diversification Opportunities for REINET INVESTMENTS and Pernod Ricard

0.37

Correlation Coefficient

REINET INVESTMENTS  Pernod Ricard

Weak diversification

The 3 months correlation between REINET and Pernod is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and Pernod Ricard go up and down completely randomly.

Pair Corralation between REINET INVESTMENTS and Pernod Ricard

Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 1.7 times more return on investment than Pernod Ricard. However, REINET INVESTMENTS is 1.7 times more volatile than Pernod Ricard SA. It trades about -0.02 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.11 per unit of risk. If you would invest  2,320  in REINET INVESTMENTS SCA on December 22, 2024 and sell it today you would lose (160.00) from holding REINET INVESTMENTS SCA or give up 6.9% of portfolio value over 90 days.

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

REINET INVESTMENTS SCA  vs.  Pernod Ricard SA

REINET INVESTMENTS SCA

Risk-Adjusted Performance

Very Weak

Over the last 90 days REINET INVESTMENTS SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pernod Ricard SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pernod Ricard SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with REINET INVESTMENTS and Pernod Ricard

The main advantage of trading using opposite REINET INVESTMENTS and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..