Correlation Between Renault Socit and CFI Compagnie

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

By analyzing existing cross correlation between Renault Socit Anonyme and CFI Compagnie Foncire Internationale, you can compare the effects of market volatilities on Renault Socit and CFI Compagnie 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 Renault Socit with a short position of CFI Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault Socit and CFI Compagnie.

Diversification Opportunities for Renault Socit and CFI Compagnie

-0.63

Correlation Coefficient

Renault Socit  CFI Compagnie

Excellent diversification

The 3 months correlation between Renault and CFI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Renault Socit Anonyme and CFI Compagnie Foncire Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFI Compagnie Foncire and Renault Socit 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 Renault Socit Anonyme are associated (or correlated) with CFI Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFI Compagnie Foncire has no effect on the direction of Renault Socit i.e., Renault Socit and CFI Compagnie go up and down completely randomly.

Pair Corralation between Renault Socit and CFI Compagnie

If you would invest  31,449  in Renault Socit Anonyme on February 1, 2024 and sell it today you would earn a total of  335.00  from holding Renault Socit Anonyme or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Renault Socit Anonyme  vs.  CFI Compagnie Foncire Internat

Renault Socit Anonyme

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Renault Socit Anonyme are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Renault Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CFI Compagnie Foncire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CFI Compagnie Foncire Internationale 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 forward indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Renault Socit and CFI Compagnie

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

The idea behind Renault Socit Anonyme and CFI Compagnie Foncire Internationale 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.