Correlation Between Trigano SA and Voyageurs

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

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

Diversification Opportunities for Trigano SA and Voyageurs

0.29

Correlation Coefficient

Trigano SA  Voyageurs

Modest diversification

The 3 months correlation between Trigano and Voyageurs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Trigano SA and Voyageurs du Monde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voyageurs du Monde and Trigano SA 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 Trigano SA are associated (or correlated) with Voyageurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voyageurs du Monde has no effect on the direction of Trigano SA i.e., Trigano SA and Voyageurs go up and down completely randomly.

Pair Corralation between Trigano SA and Voyageurs

Assuming the 90 days trading horizon Trigano SA is expected to under-perform the Voyageurs. But the stock apears to be less risky and, when comparing its historical volatility, Trigano SA is 1.88 times less risky than Voyageurs. The stock trades about -0.33 of its potential returns per unit of risk. The Voyageurs du Monde is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13,000  in Voyageurs du Monde on January 30, 2024 and sell it today you would earn a total of  1,260  from holding Voyageurs du Monde or generate 9.69% return on investment over 90 days.

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

Trigano SA  vs.  Voyageurs du Monde

Trigano SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trigano SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Trigano SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Voyageurs du Monde

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voyageurs du Monde are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Voyageurs reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trigano SA and Voyageurs

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

The idea behind Trigano SA and Voyageurs du Monde 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.