Correlation Between SPORTING and Compagnie Financière

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

By analyzing existing cross correlation between SPORTING and Compagnie Financire Richemont, you can compare the effects of market volatilities on SPORTING and Compagnie Financière 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 SPORTING with a short position of Compagnie Financière. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and Compagnie Financière.

Diversification Opportunities for SPORTING and Compagnie Financière

-0.49

Correlation Coefficient

SPORTING  Compagnie Financière

Very good diversification

The 3 months correlation between SPORTING and Compagnie is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financière and SPORTING 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 SPORTING are associated (or correlated) with Compagnie Financière. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financière has no effect on the direction of SPORTING i.e., SPORTING and Compagnie Financière go up and down completely randomly.

Pair Corralation between SPORTING and Compagnie Financière

Assuming the 90 days trading horizon SPORTING is expected to generate 0.63 times more return on investment than Compagnie Financière. However, SPORTING is 1.58 times less risky than Compagnie Financière. It trades about 0.15 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.07 per unit of risk. If you would invest  80.00  in SPORTING on December 24, 2024 and sell it today you would earn a total of  16.00  from holding SPORTING or generate 20.0% return on investment over 90 days.

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

SPORTING  vs.  Compagnie Financire Richemont

SPORTING

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPORTING are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, SPORTING unveiled solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Financière

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Compagnie Financière reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORTING and Compagnie Financière

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

The idea behind SPORTING and Compagnie Financire Richemont 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.