Correlation Between Gascogne and Acheter Louer

Can any of the company-specific risk be diversified away by investing in both Gascogne and Acheter Louer 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 Gascogne and Acheter Louer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gascogne SA and Acheter Louer, you can compare the effects of market volatilities on Gascogne and Acheter Louer 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 Gascogne with a short position of Acheter Louer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gascogne and Acheter Louer.

Diversification Opportunities for Gascogne and Acheter Louer

0.23

Correlation Coefficient

Gascogne  Acheter Louer

Modest diversification

The 3 months correlation between Gascogne and Acheter is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gascogne SA and Acheter Louer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acheter Louer and Gascogne 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 Gascogne SA are associated (or correlated) with Acheter Louer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acheter Louer has no effect on the direction of Gascogne i.e., Gascogne and Acheter Louer go up and down completely randomly.

Pair Corralation between Gascogne and Acheter Louer

Assuming the 90 days trading horizon Gascogne SA is expected to under-perform the Acheter Louer. But the stock apears to be less risky and, when comparing its historical volatility, Gascogne SA is 7.29 times less risky than Acheter Louer. The stock trades about -0.11 of its potential returns per unit of risk. The Acheter Louer is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Acheter Louer on February 1, 2024 and sell it today you would lose (0.01) from holding Acheter Louer or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gascogne SA  vs.  Acheter Louer

Gascogne SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gascogne SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Acheter Louer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acheter Louer has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gascogne and Acheter Louer

The main advantage of trading using opposite Gascogne and Acheter Louer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gascogne position performs unexpectedly, Acheter Louer 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 Acheter Louer will offset losses from the drop in Acheter Louer's long position.

The idea behind Gascogne SA and Acheter Louer 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.