Correlation Between Compagnie and Vinci SA

Can any of the company-specific risk be diversified away by investing in both Compagnie and Vinci SA 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 Vinci SA 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 Vinci SA, you can compare the effects of market volatilities on Compagnie and Vinci SA 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 Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Vinci SA.

Diversification Opportunities for Compagnie and Vinci SA

0.95

Correlation Coefficient

Compagnie  Vinci SA

Almost no diversification

The 3 months correlation between Compagnie and Vinci is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Compagnie i.e., Compagnie and Vinci SA go up and down completely randomly.

Pair Corralation between Compagnie and Vinci SA

Assuming the 90 days trading horizon Compagnie is expected to generate 1.39 times less return on investment than Vinci SA. In addition to that, Compagnie is 1.98 times more volatile than Vinci SA. It trades about 0.1 of its total potential returns per unit of risk. Vinci SA is currently generating about 0.27 per unit of volatility. If you would invest  9,872  in Vinci SA on December 30, 2024 and sell it today you would earn a total of  1,998  from holding Vinci SA or generate 20.24% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Vinci SA

Compagnie de Saint

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Vinci SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vinci SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie and Vinci SA

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

The idea behind Compagnie de Saint Gobain and Vinci 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.