Correlation Between Compagnie Financière and Christian Dior

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

By analyzing existing cross correlation between Compagnie Financire Richemont and Christian Dior SE, you can compare the effects of market volatilities on Compagnie Financière and Christian Dior 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 Financière with a short position of Christian Dior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financière and Christian Dior.

Diversification Opportunities for Compagnie Financière and Christian Dior

0.91

Correlation Coefficient

Compagnie Financière  Christian Dior

Almost no diversification

The 3 months correlation between Compagnie and Christian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and Compagnie Financière 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 Financire Richemont are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of Compagnie Financière i.e., Compagnie Financière and Christian Dior go up and down completely randomly.

Pair Corralation between Compagnie Financière and Christian Dior

Assuming the 90 days horizon Compagnie Financire Richemont is expected to generate 0.77 times more return on investment than Christian Dior. However, Compagnie Financire Richemont is 1.3 times less risky than Christian Dior. It trades about 0.02 of its potential returns per unit of risk. Christian Dior SE is currently generating about -0.05 per unit of risk. If you would invest  16,087  in Compagnie Financire Richemont on February 3, 2025 and sell it today you would earn a total of  1,513  from holding Compagnie Financire Richemont or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	57.64%
Values	Daily Returns

Compagnie Financire Richemont  vs.  Christian Dior SE

Compagnie Financière

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie Financire Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Christian Dior SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Christian Dior SE 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 nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Compagnie Financière and Christian Dior

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

The idea behind Compagnie Financire Richemont and Christian Dior SE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.