Correlation Between Kering SA and Compagnie Financiere
Can any of the company-specific risk be diversified away by investing in both Kering SA 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 Kering SA and Compagnie Financiere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kering SA and Compagnie Financiere Richemont, you can compare the effects of market volatilities on Kering SA 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 Kering SA with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kering SA and Compagnie Financiere.
Diversification Opportunities for Kering SA and Compagnie Financiere
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kering and Compagnie is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Kering SA 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 Kering SA 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 Kering SA i.e., Kering SA and Compagnie Financiere go up and down completely randomly.
Pair Corralation between Kering SA and Compagnie Financiere
Assuming the 90 days horizon Kering SA is expected to under-perform the Compagnie Financiere. In addition to that, Kering SA is 1.48 times more volatile than Compagnie Financiere Richemont. It trades about -0.27 of its total potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about -0.26 per unit of volatility. If you would invest 1,483 in Compagnie Financiere Richemont on August 28, 2024 and sell it today you would lose (158.00) from holding Compagnie Financiere Richemont or give up 10.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kering SA vs. Compagnie Financiere Richemont
Performance |
| Timeline |
| Kering SA |
| Compagnie Financiere |
Kering SA and Compagnie Financiere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kering SA and Compagnie Financiere
The main advantage of trading using opposite Kering SA and Compagnie Financiere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kering SA 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.| Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA vs. Prada Spa PK | Kering SA vs. Compagnie Financire Richemont |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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