Correlation Between Compagnie and FNP Technologies
Can any of the company-specific risk be diversified away by investing in both Compagnie and FNP Technologies 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 FNP Technologies 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 FNP Technologies SA, you can compare the effects of market volatilities on Compagnie and FNP Technologies 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 FNP Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and FNP Technologies.
Diversification Opportunities for Compagnie and FNP Technologies
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and FNP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and FNP Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNP Technologies 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 FNP Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNP Technologies has no effect on the direction of Compagnie i.e., Compagnie and FNP Technologies go up and down completely randomly.
Pair Corralation between Compagnie and FNP Technologies
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.26 times more return on investment than FNP Technologies. However, Compagnie de Saint Gobain is 3.8 times less risky than FNP Technologies. It trades about 0.1 of its potential returns per unit of risk. FNP Technologies SA is currently generating about -0.03 per unit of risk. If you would invest 4,305 in Compagnie de Saint Gobain on August 26, 2024 and sell it today you would earn a total of 4,445 from holding Compagnie de Saint Gobain or generate 103.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.27% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. FNP Technologies SA
Performance |
| Timeline |
| Compagnie de Saint |
| FNP Technologies |
Compagnie and FNP Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and FNP Technologies
The main advantage of trading using opposite Compagnie and FNP Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, FNP Technologies 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 FNP Technologies will offset losses from the drop in FNP Technologies' long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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