Correlation Between Chow Tai and Christian Dior

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

By analyzing existing cross correlation between Chow Tai Fook and Christian Dior SE, you can compare the effects of market volatilities on Chow Tai and Christian Dior 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 Chow Tai with a short position of Christian Dior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Tai and Christian Dior.

Diversification Opportunities for Chow Tai and Christian Dior

0.46

Correlation Coefficient

Chow Tai  Christian Dior

Very weak diversification

The 3 months correlation between Chow and Christian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chow Tai Fook and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and Chow Tai 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 Chow Tai Fook are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of Chow Tai i.e., Chow Tai and Christian Dior go up and down completely randomly.

Pair Corralation between Chow Tai and Christian Dior

Assuming the 90 days horizon Chow Tai Fook is expected to under-perform the Christian Dior. But the pink sheet apears to be less risky and, when comparing its historical volatility, Chow Tai Fook is 1.29 times less risky than Christian Dior. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Christian Dior SE is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  21,210  in Christian Dior SE on January 24, 2024 and sell it today you would lose (780.00) from holding Christian Dior SE or give up 3.68% of portfolio value over 90 days.

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

Chow Tai Fook  vs.  Christian Dior SE

Chow Tai Fook

Risk-Adjusted Performance

1 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chow Tai Fook are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chow Tai is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Christian Dior SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Christian Dior showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chow Tai and Christian Dior

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

The idea behind Chow Tai Fook and Christian Dior SE 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.