Correlation Between Pernod Ricard and Les Htels
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Les Htels 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 Pernod Ricard and Les Htels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and Les Htels de, you can compare the effects of market volatilities on Pernod Ricard and Les Htels 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 Pernod Ricard with a short position of Les Htels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Les Htels.
Diversification Opportunities for Pernod Ricard and Les Htels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pernod and Les is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Les Htels de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Htels de and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Les Htels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Htels de has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Les Htels go up and down completely randomly.
Pair Corralation between Pernod Ricard and Les Htels
Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Les Htels. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 3.12 times less risky than Les Htels. The stock trades about -0.33 of its potential returns per unit of risk. The Les Htels de is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 142.00 in Les Htels de on August 28, 2024 and sell it today you would lose (12.00) from holding Les Htels de or give up 8.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pernod Ricard SA vs. Les Htels de
Performance |
| Timeline |
| Pernod Ricard SA |
| Les Htels de |
Pernod Ricard and Les Htels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and Les Htels
The main advantage of trading using opposite Pernod Ricard and Les Htels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, Les Htels 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 Les Htels will offset losses from the drop in Les Htels' long position.| Pernod Ricard vs. LOreal SA | Pernod Ricard vs. Danone SA | Pernod Ricard vs. Compagnie Generale des | Pernod Ricard vs. Air Liquide SA |
| Les Htels vs. Bouygues SA | Les Htels vs. Capgemini SE | Les Htels vs. Carrefour SA | Les Htels vs. Pernod Ricard SA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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