Correlation Between Television Francaise and NRJ

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

Diversification Opportunities for Television Francaise and NRJ

-0.53

Correlation Coefficient

Television Francaise  NRJ

Excellent diversification

The 3 months correlation between Television and NRJ is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Television Francaise 1 and NRJ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRJ Group 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 NRJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRJ Group has no effect on the direction of Television Francaise i.e., Television Francaise and NRJ go up and down completely randomly.

Pair Corralation between Television Francaise and NRJ

Assuming the 90 days trading horizon Television Francaise 1 is expected to generate 0.89 times more return on investment than NRJ. However, Television Francaise 1 is 1.12 times less risky than NRJ. It trades about 0.31 of its potential returns per unit of risk. NRJ Group is currently generating about -0.04 per unit of risk. If you would invest  724.00  in Television Francaise 1 on December 30, 2024 and sell it today you would earn a total of  175.00  from holding Television Francaise 1 or generate 24.17% return on investment over 90 days.

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

Television Francaise 1  vs.  NRJ Group

Television Francaise

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Television Francaise 1 are ranked lower than 24 (%) 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.

NRJ Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, NRJ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Television Francaise and NRJ

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

The idea behind Television Francaise 1 and NRJ Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.