Correlation Between Compagnie Financiere and Hermes International
Can any of the company-specific risk be diversified away by investing in both Compagnie Financiere and Hermes International 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 Financiere and Hermes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financiere Richemont and Hermes International SA, you can compare the effects of market volatilities on Compagnie Financiere and Hermes International 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 Financiere with a short position of Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financiere and Hermes International.
Diversification Opportunities for Compagnie Financiere and Hermes International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compagnie and Hermes is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financiere Richemont and Hermes International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International and Compagnie Financiere 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 Financiere Richemont are associated (or correlated) with Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International has no effect on the direction of Compagnie Financiere i.e., Compagnie Financiere and Hermes International go up and down completely randomly.
Pair Corralation between Compagnie Financiere and Hermes International
Assuming the 90 days horizon Compagnie Financiere Richemont is expected to under-perform the Hermes International. In addition to that, Compagnie Financiere is 1.02 times more volatile than Hermes International SA. It trades about -0.26 of its total potential returns per unit of risk. Hermes International SA is currently generating about -0.15 per unit of volatility. If you would invest 23,069 in Hermes International SA on August 28, 2024 and sell it today you would lose (1,449) from holding Hermes International SA or give up 6.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Financiere Richemont vs. Hermes International SA
Performance |
| Timeline |
| Compagnie Financiere |
| Hermes International |
Compagnie Financiere and Hermes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financiere and Hermes International
The main advantage of trading using opposite Compagnie Financiere and Hermes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financiere position performs unexpectedly, Hermes International 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 Hermes International will offset losses from the drop in Hermes International's long position.| Compagnie Financiere vs. Burberry Group Plc | Compagnie Financiere vs. Hermes International SA | Compagnie Financiere vs. Prada Spa PK | Compagnie Financiere vs. Swatch Group AG |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |