Correlation Between Compagnie Des and Delfingen

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Can any of the company-specific risk be diversified away by investing in both Compagnie Des and Delfingen 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 Des and Delfingen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie des Eaux and Delfingen, you can compare the effects of market volatilities on Compagnie Des and Delfingen 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 Des with a short position of Delfingen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Des and Delfingen.

Diversification Opportunities for Compagnie Des and Delfingen

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Compagnie and Delfingen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Eaux and Delfingen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delfingen and Compagnie Des 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 des Eaux are associated (or correlated) with Delfingen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delfingen has no effect on the direction of Compagnie Des i.e., Compagnie Des and Delfingen go up and down completely randomly.

Pair Corralation between Compagnie Des and Delfingen

Assuming the 90 days trading horizon Compagnie des Eaux is expected to generate 1.46 times more return on investment than Delfingen. However, Compagnie Des is 1.46 times more volatile than Delfingen. It trades about -0.05 of its potential returns per unit of risk. Delfingen is currently generating about -0.21 per unit of risk. If you would invest  8,400  in Compagnie des Eaux on August 25, 2024 and sell it today you would lose (3,620) from holding Compagnie des Eaux or give up 43.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Compagnie des Eaux  vs.  Delfingen

 Performance 
       Timeline  
Compagnie des Eaux 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Compagnie des Eaux has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Delfingen 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Delfingen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Compagnie Des and Delfingen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compagnie Des and Delfingen

The main advantage of trading using opposite Compagnie Des and Delfingen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Des position performs unexpectedly, Delfingen 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 Delfingen will offset losses from the drop in Delfingen's long position.
The idea behind Compagnie des Eaux and Delfingen 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.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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