Correlation Between Compagnie and ICeram SA
Can any of the company-specific risk be diversified away by investing in both Compagnie and ICeram SA 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 and ICeram SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and ICeram SA, you can compare the effects of market volatilities on Compagnie and ICeram SA 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 with a short position of ICeram SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and ICeram SA.
Diversification Opportunities for Compagnie and ICeram SA
Very good diversification
The 3 months correlation between Compagnie and ICeram is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and ICeram SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICeram SA and Compagnie 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 de Saint Gobain are associated (or correlated) with ICeram SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICeram SA has no effect on the direction of Compagnie i.e., Compagnie and ICeram SA go up and down completely randomly.
Pair Corralation between Compagnie and ICeram SA
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.16 times more return on investment than ICeram SA. However, Compagnie de Saint Gobain is 6.21 times less risky than ICeram SA. It trades about 0.11 of its potential returns per unit of risk. ICeram SA is currently generating about -0.04 per unit of risk. If you would invest 5,960 in Compagnie de Saint Gobain on September 2, 2024 and sell it today you would earn a total of 2,674 from holding Compagnie de Saint Gobain or generate 44.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. ICeram SA
Performance |
| Timeline |
| Compagnie de Saint |
| ICeram SA |
Compagnie and ICeram SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and ICeram SA
The main advantage of trading using opposite Compagnie and ICeram SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, ICeram SA 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 ICeram SA will offset losses from the drop in ICeram SA's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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