Correlation Between Compagnie Financire and Kering SA
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire 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 Compagnie Financire and Kering SA 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 Kering SA, you can compare the effects of market volatilities on Compagnie Financire 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 Compagnie Financire with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and Kering SA.
Diversification Opportunities for Compagnie Financire and Kering SA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Kering is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 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 Compagnie Financire i.e., Compagnie Financire and Kering SA go up and down completely randomly.
Pair Corralation between Compagnie Financire and Kering SA
Assuming the 90 days horizon Compagnie Financire Richemont is expected to generate 0.94 times more return on investment than Kering SA. However, Compagnie Financire Richemont is 1.07 times less risky than Kering SA. It trades about 0.02 of its potential returns per unit of risk. Kering SA is currently generating about -0.05 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 | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Compagnie Financire Richemont vs. Kering SA
Performance |
| Timeline |
| Compagnie Financire |
| Kering SA |
Compagnie Financire and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financire and Kering SA
The main advantage of trading using opposite Compagnie Financire and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire 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.| Compagnie Financire vs. Christian Dior SE | Compagnie Financire vs. Kering SA | Compagnie Financire vs. Prada SpA | Compagnie Financire vs. Compagnie Financiere Richemont |
| Kering SA vs. Kering SA | Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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