Correlation Between Courtois and FIPP SA

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

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

Diversification Opportunities for Courtois and FIPP SA

0.4

Correlation Coefficient

Courtois  FIPP SA

Very weak diversification

The 3 months correlation between Courtois and FIPP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Courtois SA and FIPP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIPP SA and Courtois 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 Courtois SA are associated (or correlated) with FIPP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIPP SA has no effect on the direction of Courtois i.e., Courtois and FIPP SA go up and down completely randomly.

Pair Corralation between Courtois and FIPP SA

Assuming the 90 days trading horizon Courtois is expected to generate 2.21 times less return on investment than FIPP SA. In addition to that, Courtois is 1.05 times more volatile than FIPP SA. It trades about 0.03 of its total potential returns per unit of risk. FIPP SA is currently generating about 0.07 per unit of volatility. If you would invest  13.00  in FIPP SA on September 3, 2024 and sell it today you would earn a total of  1.00  from holding FIPP SA or generate 7.69% return on investment over 90 days.

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

Courtois SA  vs.  FIPP SA

Courtois SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Courtois SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Courtois is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FIPP SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIPP SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FIPP SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Courtois and FIPP SA

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

The idea behind Courtois SA and FIPP SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.