Correlation Between Compagnie and CFM Indosuez

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

By analyzing existing cross correlation between Compagnie de Chemins and CFM Indosuez Wealth, you can compare the effects of market volatilities on Compagnie and CFM Indosuez 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 CFM Indosuez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and CFM Indosuez.

Diversification Opportunities for Compagnie and CFM Indosuez

0.74

Correlation Coefficient

Compagnie  CFM Indosuez

Poor diversification

The 3 months correlation between Compagnie and CFM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Chemins and CFM Indosuez Wealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFM Indosuez Wealth 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 Chemins are associated (or correlated) with CFM Indosuez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFM Indosuez Wealth has no effect on the direction of Compagnie i.e., Compagnie and CFM Indosuez go up and down completely randomly.

Pair Corralation between Compagnie and CFM Indosuez

Assuming the 90 days trading horizon Compagnie is expected to generate 1.14 times less return on investment than CFM Indosuez. But when comparing it to its historical volatility, Compagnie de Chemins is 1.12 times less risky than CFM Indosuez. It trades about 0.21 of its potential returns per unit of risk. CFM Indosuez Wealth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  107,648  in CFM Indosuez Wealth on April 24, 2025 and sell it today you would earn a total of  37,352  from holding CFM Indosuez Wealth or generate 34.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Compagnie de Chemins  vs.  CFM Indosuez Wealth

Compagnie de Chemins

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

CFM Indosuez Wealth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CFM Indosuez Wealth are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CFM Indosuez reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie and CFM Indosuez

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

The idea behind Compagnie de Chemins and CFM Indosuez Wealth 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.