Correlation Between Societe Generale and Guillemot
Can any of the company-specific risk be diversified away by investing in both Societe Generale and Guillemot 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 Societe Generale and Guillemot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Societe Generale SA and Guillemot SA, you can compare the effects of market volatilities on Societe Generale and Guillemot 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 Societe Generale with a short position of Guillemot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Guillemot.
Diversification Opportunities for Societe Generale and Guillemot
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Societe and Guillemot is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale SA and Guillemot SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guillemot SA and Societe Generale 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 Societe Generale SA are associated (or correlated) with Guillemot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guillemot SA has no effect on the direction of Societe Generale i.e., Societe Generale and Guillemot go up and down completely randomly.
Pair Corralation between Societe Generale and Guillemot
Assuming the 90 days trading horizon Societe Generale SA is expected to generate 0.66 times more return on investment than Guillemot. However, Societe Generale SA is 1.52 times less risky than Guillemot. It trades about 0.03 of its potential returns per unit of risk. Guillemot SA is currently generating about -0.02 per unit of risk. If you would invest 2,014 in Societe Generale SA on September 2, 2024 and sell it today you would earn a total of 496.00 from holding Societe Generale SA or generate 24.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Societe Generale SA vs. Guillemot SA
Performance |
| Timeline |
| Societe Generale |
| Guillemot SA |
Societe Generale and Guillemot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe Generale and Guillemot
The main advantage of trading using opposite Societe Generale and Guillemot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale position performs unexpectedly, Guillemot 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 Guillemot will offset losses from the drop in Guillemot's long position.| Societe Generale vs. Credit Agricole SA | Societe Generale vs. AXA SA | Societe Generale vs. Sanofi SA | Societe Generale vs. Renault SA |
| Guillemot vs. Claranova SE | Guillemot vs. SA Catana Group | Guillemot vs. Neurones | Guillemot vs. Groupe Guillin SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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