Correlation Between Carrefour and FreelanceCom
Can any of the company-specific risk be diversified away by investing in both Carrefour and FreelanceCom 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 Carrefour and FreelanceCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA and FreelanceCom, you can compare the effects of market volatilities on Carrefour and FreelanceCom 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 Carrefour with a short position of FreelanceCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and FreelanceCom.
Diversification Opportunities for Carrefour and FreelanceCom
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carrefour and FreelanceCom is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and FreelanceCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FreelanceCom and Carrefour 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 Carrefour SA are associated (or correlated) with FreelanceCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FreelanceCom has no effect on the direction of Carrefour i.e., Carrefour and FreelanceCom go up and down completely randomly.
Pair Corralation between Carrefour and FreelanceCom
Assuming the 90 days horizon Carrefour SA is expected to generate 0.91 times more return on investment than FreelanceCom. However, Carrefour SA is 1.1 times less risky than FreelanceCom. It trades about 0.01 of its potential returns per unit of risk. FreelanceCom is currently generating about -0.31 per unit of risk. If you would invest 1,367 in Carrefour SA on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Carrefour SA or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrefour SA vs. FreelanceCom
Performance |
| Timeline |
| Carrefour SA |
| FreelanceCom |
Carrefour and FreelanceCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and FreelanceCom
The main advantage of trading using opposite Carrefour and FreelanceCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, FreelanceCom 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 FreelanceCom will offset losses from the drop in FreelanceCom's long position.| Carrefour vs. Danone SA | Carrefour vs. Renault SA | Carrefour vs. AXA SA | Carrefour vs. Compagnie de Saint Gobain |
| FreelanceCom vs. Claranova SE | FreelanceCom vs. SA Catana Group | FreelanceCom vs. Mediantechn | FreelanceCom vs. Groupe LDLC SA |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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