Correlation Between Compagnie Financire and Prada SpA

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

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

Diversification Opportunities for Compagnie Financire and Prada SpA

0.31

Correlation Coefficient

Compagnie Financire  Prada SpA

Weak diversification

The 3 months correlation between Compagnie and Prada is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Prada SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prada SpA and Compagnie Financire 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 Financire Richemont are associated (or correlated) with Prada SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prada SpA has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Prada SpA go up and down completely randomly.

Pair Corralation between Compagnie Financire and Prada SpA

Assuming the 90 days horizon Compagnie Financire Richemont is expected to under-perform the Prada SpA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compagnie Financire Richemont is 1.91 times less risky than Prada SpA. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Prada SpA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  587.00  in Prada SpA on May 4, 2025 and sell it today you would lose (1.00) from holding Prada SpA or give up 0.17% of portfolio value over 90 days.

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

Compagnie Financire Richemont  vs.  Prada SpA

Compagnie Financire

Risk-Adjusted Performance

Weak

Over the last 90 days Compagnie Financire Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Compagnie Financire is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Prada SpA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prada SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Prada SpA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Compagnie Financire and Prada SpA

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

The idea behind Compagnie Financire Richemont and Prada SpA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.