Correlation Between Compagnie and Stradim Espace

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

By analyzing existing cross correlation between Compagnie de Saint Gobain and Stradim Espace Finances, you can compare the effects of market volatilities on Compagnie and Stradim Espace 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 Compagnie with a short position of Stradim Espace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Stradim Espace.

Diversification Opportunities for Compagnie and Stradim Espace

-0.47

Correlation Coefficient

Compagnie  Stradim Espace

Very good diversification

The 3 months correlation between Compagnie and Stradim is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Stradim Espace Finances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stradim Espace Finances and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Stradim Espace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stradim Espace Finances has no effect on the direction of Compagnie i.e., Compagnie and Stradim Espace go up and down completely randomly.

Pair Corralation between Compagnie and Stradim Espace

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.36 times more return on investment than Stradim Espace. However, Compagnie de Saint Gobain is 2.75 times less risky than Stradim Espace. It trades about 0.07 of its potential returns per unit of risk. Stradim Espace Finances is currently generating about -0.02 per unit of risk. If you would invest  8,188  in Compagnie de Saint Gobain on September 23, 2024 and sell it today you would earn a total of  338.00  from holding Compagnie de Saint Gobain or generate 4.13% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Stradim Espace Finances

Compagnie de Saint

Risk-Adjusted Performance

3 of 100

Insignificant

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

Stradim Espace Finances

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stradim Espace Finances has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Stradim Espace is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compagnie and Stradim Espace

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

The idea behind Compagnie de Saint Gobain and Stradim Espace Finances 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.