Correlation Between Hermes International and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Hermes International and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on Hermes International and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Pernod Ricard.
Diversification Opportunities for Hermes International and Pernod Ricard
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hermes and Pernod is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Hermes International i.e., Hermes International and Pernod Ricard go up and down completely randomly.
Pair Corralation between Hermes International and Pernod Ricard
Assuming the 90 days trading horizon Hermes International SCA is expected to generate 0.81 times more return on investment than Pernod Ricard. However, Hermes International SCA is 1.23 times less risky than Pernod Ricard. It trades about 0.39 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.06 per unit of risk. If you would invest 201,800 in Hermes International SCA on November 18, 2024 and sell it today you would earn a total of 82,100 from holding Hermes International SCA or generate 40.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SCA vs. Pernod Ricard SA
Performance |
| Timeline |
| Hermes International SCA |
| Pernod Ricard SA |
Hermes International and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Pernod Ricard
The main advantage of trading using opposite Hermes International and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard'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 |
| Pernod Ricard vs. LOreal SA | Pernod Ricard vs. Danone SA | Pernod Ricard vs. Compagnie Generale des | Pernod Ricard vs. Air Liquide 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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