Correlation Between Safran SA and Carrefour

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

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

Diversification Opportunities for Safran SA and Carrefour

-0.52

Correlation Coefficient

Safran SA  Carrefour

Excellent diversification

The 3 months correlation between Safran and Carrefour is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA and Safran SA 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 Safran SA are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Safran SA i.e., Safran SA and Carrefour go up and down completely randomly.

Pair Corralation between Safran SA and Carrefour

Assuming the 90 days trading horizon Safran SA is expected to generate 0.93 times more return on investment than Carrefour. However, Safran SA is 1.07 times less risky than Carrefour. It trades about 0.15 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.02 per unit of risk. If you would invest  21,000  in Safran SA on December 30, 2024 and sell it today you would earn a total of  3,590  from holding Safran SA or generate 17.1% return on investment over 90 days.

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

Safran SA  vs.  Carrefour SA

Safran SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Safran SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking indicators, Safran SA reported solid returns over the last few months and may actually be approaching a breakup point.

Carrefour SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Safran SA and Carrefour

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

The idea behind Safran SA and Carrefour 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.