Correlation Between Kering SA and CSL

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

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

Diversification Opportunities for Kering SA and CSL

0.8

Correlation Coefficient

Kering SA  CSL

Very poor diversification

The 3 months correlation between Kering and CSL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Kering 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 Kering SA are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Kering SA i.e., Kering SA and CSL go up and down completely randomly.

Pair Corralation between Kering SA and CSL

Assuming the 90 days horizon Kering SA is expected to generate 2.22 times more return on investment than CSL. However, Kering SA is 2.22 times more volatile than CSL. It trades about 0.11 of its potential returns per unit of risk. CSL is currently generating about 0.15 per unit of risk. If you would invest  2,100  in Kering SA on May 12, 2025 and sell it today you would earn a total of  419.00  from holding Kering SA or generate 19.95% return on investment over 90 days.

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

Kering SA  vs.  CSL

Kering SA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Kering SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kering SA showed solid returns over the last few months and may actually be approaching a breakup point.

CSL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Kering SA and CSL

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

The idea behind Kering SA and CSL 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.