Correlation Between Groupe Sfpi and Centrale DAchat

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

By analyzing existing cross correlation between Groupe Sfpi and Centrale dAchat Franaise, you can compare the effects of market volatilities on Groupe Sfpi and Centrale DAchat 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 Groupe Sfpi with a short position of Centrale DAchat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupe Sfpi and Centrale DAchat.

Diversification Opportunities for Groupe Sfpi and Centrale DAchat

-0.35

Correlation Coefficient

Groupe Sfpi  Centrale DAchat

Very good diversification

The 3 months correlation between Groupe and Centrale is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Groupe Sfpi and Centrale dAchat Franaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrale dAchat Franaise and Groupe Sfpi 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 Groupe Sfpi are associated (or correlated) with Centrale DAchat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrale dAchat Franaise has no effect on the direction of Groupe Sfpi i.e., Groupe Sfpi and Centrale DAchat go up and down completely randomly.

Pair Corralation between Groupe Sfpi and Centrale DAchat

Assuming the 90 days trading horizon Groupe Sfpi is expected to generate 1.04 times less return on investment than Centrale DAchat. In addition to that, Groupe Sfpi is 1.47 times more volatile than Centrale dAchat Franaise. It trades about 0.03 of its total potential returns per unit of risk. Centrale dAchat Franaise is currently generating about 0.05 per unit of volatility. If you would invest  786.00  in Centrale dAchat Franaise on December 2, 2024 and sell it today you would earn a total of  26.00  from holding Centrale dAchat Franaise or generate 3.31% return on investment over 90 days.

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

Groupe Sfpi  vs.  Centrale dAchat Franaise

Groupe Sfpi

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Groupe Sfpi is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Centrale dAchat Franaise

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centrale dAchat Franaise are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centrale DAchat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Groupe Sfpi and Centrale DAchat

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

The idea behind Groupe Sfpi and Centrale dAchat Franaise 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.