Correlation Between Compagnie and Kalray SA
Can any of the company-specific risk be diversified away by investing in both Compagnie and Kalray 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 Kalray 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 Kalray SA, you can compare the effects of market volatilities on Compagnie and Kalray 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 Kalray SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Kalray SA.
Diversification Opportunities for Compagnie and Kalray SA
Pay attention - limited upside
The 3 months correlation between Compagnie and Kalray is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Kalray SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalray 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 Kalray SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalray SA has no effect on the direction of Compagnie i.e., Compagnie and Kalray SA go up and down completely randomly.
Pair Corralation between Compagnie and Kalray SA
Assuming the 90 days trading horizon Compagnie is expected to generate 23.18 times less return on investment than Kalray SA. But when comparing it to its historical volatility, Compagnie de Saint Gobain is 16.67 times less risky than Kalray SA. It trades about 0.13 of its potential returns per unit of risk. Kalray SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 121.00 in Kalray SA on August 30, 2024 and sell it today you would earn a total of 95.00 from holding Kalray SA or generate 78.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Kalray SA
Performance |
| Timeline |
| Compagnie de Saint |
| Kalray SA |
Compagnie and Kalray SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Kalray SA
The main advantage of trading using opposite Compagnie and Kalray SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Kalray 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 Kalray SA will offset losses from the drop in Kalray SA's long position.The idea behind Compagnie de Saint Gobain and Kalray SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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