Correlation Between Television Francaise and Fnac Darty

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

By analyzing existing cross correlation between Television Francaise 1 and Fnac Darty SA, you can compare the effects of market volatilities on Television Francaise and Fnac Darty 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 Television Francaise with a short position of Fnac Darty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Television Francaise and Fnac Darty.

Diversification Opportunities for Television Francaise and Fnac Darty

0.8

Correlation Coefficient

Television Francaise  Fnac Darty

Very poor diversification

The 3 months correlation between Television and Fnac is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Television Francaise 1 and Fnac Darty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fnac Darty SA and Television Francaise 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 Television Francaise 1 are associated (or correlated) with Fnac Darty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fnac Darty SA has no effect on the direction of Television Francaise i.e., Television Francaise and Fnac Darty go up and down completely randomly.

Pair Corralation between Television Francaise and Fnac Darty

Assuming the 90 days trading horizon Television Francaise is expected to generate 1.09 times less return on investment than Fnac Darty. But when comparing it to its historical volatility, Television Francaise 1 is 1.63 times less risky than Fnac Darty. It trades about 0.2 of its potential returns per unit of risk. Fnac Darty SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,605  in Fnac Darty SA on December 2, 2024 and sell it today you would earn a total of  390.00  from holding Fnac Darty SA or generate 14.97% return on investment over 90 days.

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

Television Francaise 1  vs.  Fnac Darty SA

Television Francaise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Television Francaise 1 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Television Francaise sustained solid returns over the last few months and may actually be approaching a breakup point.

Fnac Darty SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fnac Darty SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fnac Darty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Television Francaise and Fnac Darty

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

The idea behind Television Francaise 1 and Fnac Darty 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.