Correlation Between Hermes International and Compagnie Financiere
Can any of the company-specific risk be diversified away by investing in both Hermes International and Compagnie Financiere 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 Hermes International and Compagnie Financiere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SCA and Compagnie Financiere Richemont, you can compare the effects of market volatilities on Hermes International and Compagnie Financiere 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 Hermes International with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Compagnie Financiere.
Diversification Opportunities for Hermes International and Compagnie Financiere
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hermes and Compagnie is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Hermes International 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 Hermes International SCA are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Hermes International i.e., Hermes International and Compagnie Financiere go up and down completely randomly.
Pair Corralation between Hermes International and Compagnie Financiere
Assuming the 90 days horizon Hermes International is expected to generate 1.31 times less return on investment than Compagnie Financiere. But when comparing it to its historical volatility, Hermes International SCA is 1.97 times less risky than Compagnie Financiere. It trades about 0.48 of its potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,514 in Compagnie Financiere Richemont on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Compagnie Financiere Richemont or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SCA vs. Compagnie Financiere Richemont
Performance |
| Timeline |
| Hermes International SCA |
| Compagnie Financiere |
Hermes International and Compagnie Financiere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Compagnie Financiere
The main advantage of trading using opposite Hermes International and Compagnie Financiere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Compagnie Financiere 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 Financiere will offset losses from the drop in Compagnie Financiere's long position.| Hermes International vs. Christian Dior SE | Hermes International vs. Burberry Group Plc | Hermes International vs. Compagnie Financiere Richemont | Hermes International vs. Hermes International SA |
| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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