Correlation Between Societe Generale and Compagnie
Can any of the company-specific risk be diversified away by investing in both Societe Generale and Compagnie 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 Compagnie 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 Compagnie de Chemins, you can compare the effects of market volatilities on Societe Generale and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Compagnie.
Diversification Opportunities for Societe Generale and Compagnie
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Societe and Compagnie is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale SA and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of Societe Generale i.e., Societe Generale and Compagnie go up and down completely randomly.
Pair Corralation between Societe Generale and Compagnie
Assuming the 90 days trading horizon Societe Generale is expected to generate 1.87 times less return on investment than Compagnie. In addition to that, Societe Generale is 1.07 times more volatile than Compagnie de Chemins. It trades about 0.04 of its total potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.09 per unit of volatility. If you would invest 65,500 in Compagnie de Chemins on August 26, 2024 and sell it today you would earn a total of 24,500 from holding Compagnie de Chemins or generate 37.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Societe Generale SA vs. Compagnie de Chemins
Performance |
| Timeline |
| Societe Generale |
| Compagnie de Chemins |
Societe Generale and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe Generale and Compagnie
The main advantage of trading using opposite Societe Generale and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. AXA SA | Societe Generale vs. Renault SA |
| Compagnie vs. Sogeclair SA | Compagnie vs. Gaztransport Technigaz SAS | Compagnie vs. Hitechpros | Compagnie vs. Avenir Telecom 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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