Correlation Between Compagnie Financière and Hermès International
Can any of the company-specific risk be diversified away by investing in both Compagnie Financière and Hermès International 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 Financière and Hermès International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and Herms International Socit, you can compare the effects of market volatilities on Compagnie Financière and Hermès International 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 Financière with a short position of Hermès International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financière and Hermès International.
Diversification Opportunities for Compagnie Financière and Hermès International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compagnie and Hermès is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit and Compagnie Financière 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 Financire Richemont are associated (or correlated) with Hermès International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of Compagnie Financière i.e., Compagnie Financière and Hermès International go up and down completely randomly.
Pair Corralation between Compagnie Financière and Hermès International
Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 1.82 times more return on investment than Hermès International. However, Compagnie Financière is 1.82 times more volatile than Herms International Socit. It trades about 0.19 of its potential returns per unit of risk. Herms International Socit is currently generating about 0.25 per unit of risk. If you would invest 1,350 in Compagnie Financire Richemont on November 6, 2024 and sell it today you would earn a total of 550.00 from holding Compagnie Financire Richemont or generate 40.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Financire Richemont vs. Herms International Socit
Performance |
| Timeline |
| Compagnie Financière |
| Herms International Socit |
Compagnie Financière and Hermès International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financière and Hermès International
The main advantage of trading using opposite Compagnie Financière and Hermès International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financière position performs unexpectedly, Hermès International 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 Hermès International will offset losses from the drop in Hermès International's long position.| Compagnie Financière vs. LVMH Mot Hennessy | Compagnie Financière vs. LVMH Mot Hennessy | Compagnie Financière vs. LVMH Mot Hennessy | Compagnie Financière vs. Herms International Socit |
| Hermès International vs. ZURICH INSURANCE GROUP | Hermès International vs. Aya Gold Silver | Hermès International vs. Direct Line Insurance | Hermès International vs. United Insurance Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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