Correlation Between 23291KAK1 and Inter Parfums

Can any of the company-specific risk be diversified away by investing in both 23291KAK1 and Inter Parfums 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 23291KAK1 and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DH EUROPE FINANCE and Inter Parfums, you can compare the effects of market volatilities on 23291KAK1 and Inter Parfums 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 23291KAK1 with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23291KAK1 and Inter Parfums.

Diversification Opportunities for 23291KAK1 and Inter Parfums

-0.6

Correlation Coefficient

23291KAK1  Inter Parfums

Excellent diversification

The 3 months correlation between 23291KAK1 and Inter is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding DH EUROPE FINANCE and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and 23291KAK1 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 DH EUROPE FINANCE are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of 23291KAK1 i.e., 23291KAK1 and Inter Parfums go up and down completely randomly.

Pair Corralation between 23291KAK1 and Inter Parfums

Assuming the 90 days trading horizon DH EUROPE FINANCE is expected to generate 1.49 times more return on investment than Inter Parfums. However, 23291KAK1 is 1.49 times more volatile than Inter Parfums. It trades about 0.21 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.28 per unit of risk. If you would invest  7,102  in DH EUROPE FINANCE on October 22, 2024 and sell it today you would earn a total of  269.00  from holding DH EUROPE FINANCE or generate 3.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	47.37%
Values	Daily Returns

DH EUROPE FINANCE  vs.  Inter Parfums

DH EUROPE FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DH EUROPE FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 23291KAK1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inter Parfums

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Inter Parfums reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 23291KAK1 and Inter Parfums

The main advantage of trading using opposite 23291KAK1 and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23291KAK1 position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.

The idea behind DH EUROPE FINANCE and Inter Parfums 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.