Correlation Between Compagnie Financire and JSE
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire and JSE 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 Compagnie Financire and JSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and JSE Limited, you can compare the effects of market volatilities on Compagnie Financire and JSE 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 Compagnie Financire with a short position of JSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and JSE.
Diversification Opportunities for Compagnie Financire and JSE
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Compagnie and JSE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and JSE Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSE Limited and Compagnie Financire 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 Compagnie Financire Richemont are associated (or correlated) with JSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSE Limited has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and JSE go up and down completely randomly.
Pair Corralation between Compagnie Financire and JSE
Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 1.45 times more return on investment than JSE. However, Compagnie Financire is 1.45 times more volatile than JSE Limited. It trades about -0.11 of its potential returns per unit of risk. JSE Limited is currently generating about -0.2 per unit of risk. If you would invest 26,154,800 in Compagnie Financire Richemont on August 30, 2024 and sell it today you would lose (1,200,200) from holding Compagnie Financire Richemont or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Financire Richemont vs. JSE Limited
Performance |
| Timeline |
| Compagnie Financire |
| JSE Limited |
Compagnie Financire and JSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financire and JSE
The main advantage of trading using opposite Compagnie Financire and JSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire position performs unexpectedly, JSE 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 JSE will offset losses from the drop in JSE's long position.| Compagnie Financire vs. Allied Electronics | Compagnie Financire vs. CA Sales Holdings | Compagnie Financire vs. eMedia Holdings Limited | Compagnie Financire vs. African Media Entertainment |
| JSE vs. British American Tobacco | JSE vs. Anglo American PLC | JSE vs. Anglo American Platinum | JSE vs. ABSA Bank Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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