Correlation Between Interparfums and Nextedia

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

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

Diversification Opportunities for Interparfums and Nextedia

0.72

Correlation Coefficient

Interparfums  Nextedia

Poor diversification

The 3 months correlation between Interparfums and Nextedia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and Nextedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextedia and Interparfums 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 Interparfums SA are associated (or correlated) with Nextedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextedia has no effect on the direction of Interparfums i.e., Interparfums and Nextedia go up and down completely randomly.

Pair Corralation between Interparfums and Nextedia

Assuming the 90 days trading horizon Interparfums SA is expected to generate 0.5 times more return on investment than Nextedia. However, Interparfums SA is 1.98 times less risky than Nextedia. It trades about 0.11 of its potential returns per unit of risk. Nextedia is currently generating about 0.01 per unit of risk. If you would invest  3,038  in Interparfums SA on April 20, 2025 and sell it today you would earn a total of  326.00  from holding Interparfums SA or generate 10.73% return on investment over 90 days.

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

Interparfums SA  vs.  Nextedia

Interparfums SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interparfums SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Interparfums may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Nextedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nextedia is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Interparfums and Nextedia

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

The idea behind Interparfums SA and Nextedia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.