Correlation Between Watches Of and Kering SA

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

By analyzing existing cross correlation between Watches of Switzerland and Kering SA, you can compare the effects of market volatilities on Watches Of and Kering 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 Watches Of with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Watches Of and Kering SA.

Diversification Opportunities for Watches Of and Kering SA

0.22

Correlation Coefficient

Watches Of  Kering SA

Modest diversification

The 3 months correlation between Watches and Kering is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Watches of Switzerland and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and Watches Of 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 Watches of Switzerland are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Watches Of i.e., Watches Of and Kering SA go up and down completely randomly.

Pair Corralation between Watches Of and Kering SA

Assuming the 90 days horizon Watches of Switzerland is expected to under-perform the Kering SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Watches of Switzerland is 1.37 times less risky than Kering SA. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Kering SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  23,537  in Kering SA on December 30, 2024 and sell it today you would lose (2,111) from holding Kering SA or give up 8.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Watches of Switzerland  vs.  Kering SA

Watches of Switzerland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Watches of Switzerland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kering SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Watches Of and Kering SA

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

The idea behind Watches of Switzerland and Kering 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.