Correlation Between Compagnie Des and ST Dupont
Can any of the company-specific risk be diversified away by investing in both Compagnie Des and ST Dupont 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 ST Dupont into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie des Tramways and ST Dupont, you can compare the effects of market volatilities on Compagnie Des and ST Dupont 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 ST Dupont. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Des and ST Dupont.
Diversification Opportunities for Compagnie Des and ST Dupont
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compagnie and DPT is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Tramways and ST Dupont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Dupont 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 Tramways are associated (or correlated) with ST Dupont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Dupont has no effect on the direction of Compagnie Des i.e., Compagnie Des and ST Dupont go up and down completely randomly.
Pair Corralation between Compagnie Des and ST Dupont
Assuming the 90 days trading horizon Compagnie des Tramways is expected to generate 3.05 times more return on investment than ST Dupont. However, Compagnie Des is 3.05 times more volatile than ST Dupont. It trades about 0.15 of its potential returns per unit of risk. ST Dupont is currently generating about 0.21 per unit of risk. If you would invest 595,000 in Compagnie des Tramways on September 2, 2024 and sell it today you would earn a total of 325,000 from holding Compagnie des Tramways or generate 54.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 72.73% |
| Values | Daily Returns |
Compagnie des Tramways vs. ST Dupont
Performance |
| Timeline |
| Compagnie des Tramways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| ST Dupont |
Compagnie Des and ST Dupont Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Des and ST Dupont
The main advantage of trading using opposite Compagnie Des and ST Dupont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Des position performs unexpectedly, ST Dupont 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 ST Dupont will offset losses from the drop in ST Dupont's long position.| Compagnie Des vs. Reworld Media | Compagnie Des vs. Hotel Majestic Cannes | Compagnie Des vs. Sogeclair SA | Compagnie Des vs. Axway Software |
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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