Correlation Between Pernod Ricard and Groove Botanicals

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

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

Diversification Opportunities for Pernod Ricard and Groove Botanicals

-0.22

Correlation Coefficient

Pernod Ricard  Groove Botanicals

Very good diversification

The 3 months correlation between Pernod and Groove is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Groove Botanicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groove Botanicals and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Groove Botanicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groove Botanicals has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Groove Botanicals go up and down completely randomly.

Pair Corralation between Pernod Ricard and Groove Botanicals

Assuming the 90 days horizon Pernod Ricard is expected to generate 38.11 times less return on investment than Groove Botanicals. But when comparing it to its historical volatility, Pernod Ricard SA is 15.33 times less risky than Groove Botanicals. It trades about 0.06 of its potential returns per unit of risk. Groove Botanicals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.51  in Groove Botanicals on May 5, 2025 and sell it today you would earn a total of  0.20  from holding Groove Botanicals or generate 39.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Pernod Ricard SA  vs.  Groove Botanicals

Pernod Ricard SA

Risk-Adjusted Performance

Very Weak

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

Groove Botanicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groove Botanicals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Groove Botanicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pernod Ricard and Groove Botanicals

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

The idea behind Pernod Ricard SA and Groove Botanicals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.