Correlation Between Compagnie and DIeteren Group
Can any of the company-specific risk be diversified away by investing in both Compagnie and DIeteren Group 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 and DIeteren Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie du Bois and DIeteren Group SA, you can compare the effects of market volatilities on Compagnie and DIeteren Group 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 with a short position of DIeteren Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and DIeteren Group.
Diversification Opportunities for Compagnie and DIeteren Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and DIeteren is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Bois and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA and Compagnie 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 du Bois are associated (or correlated) with DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of Compagnie i.e., Compagnie and DIeteren Group go up and down completely randomly.
Pair Corralation between Compagnie and DIeteren Group
Assuming the 90 days trading horizon Compagnie du Bois is expected to under-perform the DIeteren Group. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie du Bois is 1.03 times less risky than DIeteren Group. The stock trades about -0.04 of its potential returns per unit of risk. The DIeteren Group SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,371 in DIeteren Group SA on August 26, 2024 and sell it today you would earn a total of 5,109 from holding DIeteren Group SA or generate 33.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie du Bois vs. DIeteren Group SA
Performance |
| Timeline |
| Compagnie du Bois |
| DIeteren Group SA |
Compagnie and DIeteren Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and DIeteren Group
The main advantage of trading using opposite Compagnie and DIeteren Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, DIeteren Group 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 DIeteren Group will offset losses from the drop in DIeteren Group's long position.| Compagnie vs. Brederode SA | Compagnie vs. GIMV NV | Compagnie vs. Ackermans Van Haaren | Compagnie vs. Groep Brussel Lambert |
| DIeteren Group vs. Ackermans Van Haaren | DIeteren Group vs. Sofina Socit Anonyme | DIeteren Group vs. Groep Brussel Lambert | DIeteren Group vs. Barco NV |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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