Correlation Between CMG Cleantech and Paulic Meunerie
Can any of the company-specific risk be diversified away by investing in both CMG Cleantech and Paulic Meunerie 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 CMG Cleantech and Paulic Meunerie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Cleantech SA and Paulic Meunerie Sa, you can compare the effects of market volatilities on CMG Cleantech and Paulic Meunerie 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 CMG Cleantech with a short position of Paulic Meunerie. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and Paulic Meunerie.
Diversification Opportunities for CMG Cleantech and Paulic Meunerie
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CMG and Paulic is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and Paulic Meunerie Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paulic Meunerie Sa and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with Paulic Meunerie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paulic Meunerie Sa has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and Paulic Meunerie go up and down completely randomly.
Pair Corralation between CMG Cleantech and Paulic Meunerie
Assuming the 90 days trading horizon CMG Cleantech SA is expected to generate 2.55 times more return on investment than Paulic Meunerie. However, CMG Cleantech is 2.55 times more volatile than Paulic Meunerie Sa. It trades about -0.01 of its potential returns per unit of risk. Paulic Meunerie Sa is currently generating about -0.06 per unit of risk. If you would invest 410.00 in CMG Cleantech SA on August 27, 2024 and sell it today you would lose (290.00) from holding CMG Cleantech SA or give up 70.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.44% |
| Values | Daily Returns |
CMG Cleantech SA vs. Paulic Meunerie Sa
Performance |
| Timeline |
| CMG Cleantech SA |
| Paulic Meunerie Sa |
CMG Cleantech and Paulic Meunerie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMG Cleantech and Paulic Meunerie
The main advantage of trading using opposite CMG Cleantech and Paulic Meunerie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMG Cleantech position performs unexpectedly, Paulic Meunerie 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 Paulic Meunerie will offset losses from the drop in Paulic Meunerie's long position.The idea behind CMG Cleantech SA and Paulic Meunerie Sa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Paulic Meunerie vs. Diagnostic Medical Systems | Paulic Meunerie vs. Credit Agricole SA | Paulic Meunerie vs. Axway Software | Paulic Meunerie vs. Sidetrade |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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