Correlation Between Prada Spa and Christian Dior

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

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

Diversification Opportunities for Prada Spa and Christian Dior

0.88

Correlation Coefficient

Prada Spa  Christian Dior

Very poor diversification

The 3 months correlation between Prada and Christian is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prada Spa PK 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 Prada Spa 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 Prada Spa PK 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 Prada Spa i.e., Prada Spa and Christian Dior go up and down completely randomly.

Pair Corralation between Prada Spa and Christian Dior

Assuming the 90 days horizon Prada Spa PK is expected to generate 0.87 times more return on investment than Christian Dior. However, Prada Spa PK is 1.15 times less risky than Christian Dior. It trades about 0.16 of its potential returns per unit of risk. Christian Dior SE is currently generating about 0.02 per unit of risk. If you would invest  1,114  in Prada Spa PK on March 6, 2025 and sell it today you would earn a total of  188.00  from holding Prada Spa PK or generate 16.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

Prada Spa PK  vs.  Christian Dior SE

Prada Spa PK

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prada Spa PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Prada Spa and Christian Dior

The main advantage of trading using opposite Prada Spa and Christian Dior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prada Spa 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 Prada Spa PK 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..