Correlation Between Pernod Ricard and Nippon Telegraph

Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Nippon Telegraph 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 Nippon Telegraph 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 Nippon Telegraph Telephone, you can compare the effects of market volatilities on Pernod Ricard and Nippon Telegraph 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 Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Nippon Telegraph.

Diversification Opportunities for Pernod Ricard and Nippon Telegraph

-0.02

Correlation Coefficient

Pernod Ricard  Nippon Telegraph

Good diversification

The 3 months correlation between Pernod and Nippon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Nippon Telegraph Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph Tel 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 Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph Tel has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Nippon Telegraph go up and down completely randomly.

Pair Corralation between Pernod Ricard and Nippon Telegraph

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Nippon Telegraph. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 4.75 times less risky than Nippon Telegraph. The stock trades about -0.04 of its potential returns per unit of risk. The Nippon Telegraph Telephone is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Nippon Telegraph Telephone on May 6, 2025 and sell it today you would lose (15.00) from holding Nippon Telegraph Telephone or give up 13.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Pernod Ricard SA  vs.  Nippon Telegraph Telephone

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.

Nippon Telegraph Tel

Risk-Adjusted Performance

Weak

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

Pair Trading with Pernod Ricard and Nippon Telegraph

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

The idea behind Pernod Ricard SA and Nippon Telegraph Telephone 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.