Correlation Between Compagnie Financire and Chow Tai
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire and Chow Tai 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 Chow Tai 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 Chow Tai Fook, you can compare the effects of market volatilities on Compagnie Financire and Chow Tai 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 Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and Chow Tai.
Diversification Opportunities for Compagnie Financire and Chow Tai
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compagnie and Chow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook 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 Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Chow Tai go up and down completely randomly.
Pair Corralation between Compagnie Financire and Chow Tai
Assuming the 90 days horizon Compagnie Financire Richemont is expected to generate 0.66 times more return on investment than Chow Tai. However, Compagnie Financire Richemont is 1.52 times less risky than Chow Tai. It trades about 0.02 of its potential returns per unit of risk. Chow Tai Fook is currently generating about -0.02 per unit of risk. If you would invest 11,938 in Compagnie Financire Richemont on August 24, 2024 and sell it today you would earn a total of 1,348 from holding Compagnie Financire Richemont or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.94% |
| Values | Daily Returns |
Compagnie Financire Richemont vs. Chow Tai Fook
Performance |
| Timeline |
| Compagnie Financire |
| Chow Tai Fook |
Compagnie Financire and Chow Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financire and Chow Tai
The main advantage of trading using opposite Compagnie Financire and Chow Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire position performs unexpectedly, Chow Tai 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 Chow Tai will offset losses from the drop in Chow Tai's long position.| Compagnie Financire vs. Christian Dior SE | Compagnie Financire vs. Kering SA | Compagnie Financire vs. Prada SpA | Compagnie Financire vs. Compagnie Financiere Richemont |
| Chow Tai vs. Prada Spa PK | Chow Tai vs. Christian Dior SE | Chow Tai vs. Kering SA | Chow Tai vs. Christian Dior SE |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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