Correlation Between Hermes International and Cibox Interctive
Can any of the company-specific risk be diversified away by investing in both Hermes International and Cibox Interctive 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 Hermes International and Cibox Interctive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SCA and Cibox Interctive SA, you can compare the effects of market volatilities on Hermes International and Cibox Interctive 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 Hermes International with a short position of Cibox Interctive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Cibox Interctive.
Diversification Opportunities for Hermes International and Cibox Interctive
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hermes and Cibox is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA and Cibox Interctive SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibox Interctive and Hermes International 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 Hermes International SCA are associated (or correlated) with Cibox Interctive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibox Interctive has no effect on the direction of Hermes International i.e., Hermes International and Cibox Interctive go up and down completely randomly.
Pair Corralation between Hermes International and Cibox Interctive
Assuming the 90 days trading horizon Hermes International is expected to generate 2.06 times less return on investment than Cibox Interctive. But when comparing it to its historical volatility, Hermes International SCA is 6.06 times less risky than Cibox Interctive. It trades about 0.06 of its potential returns per unit of risk. Cibox Interctive SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5.76 in Cibox Interctive SA on September 14, 2024 and sell it today you would lose (2.20) from holding Cibox Interctive SA or give up 38.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hermes International SCA vs. Cibox Interctive SA
Performance |
| Timeline |
| Hermes International SCA |
| Cibox Interctive |
Hermes International and Cibox Interctive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Cibox Interctive
The main advantage of trading using opposite Hermes International and Cibox Interctive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Cibox Interctive 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 Cibox Interctive will offset losses from the drop in Cibox Interctive's long position.| Hermes International vs. Kering SA | Hermes International vs. LVMH Mot Hennessy | Hermes International vs. LOreal SA | Hermes International vs. Christian Dior SE |
| Cibox Interctive vs. LVMH Mot Hennessy | Cibox Interctive vs. LOreal SA | Cibox Interctive vs. Hermes International SCA | Cibox Interctive vs. Manitou BF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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