Correlation Between LOreal SA and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both LOreal SA and AMG Advanced 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 LOreal SA and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and AMG Advanced Metallurgical, you can compare the effects of market volatilities on LOreal SA and AMG Advanced 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 LOreal SA with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and AMG Advanced.
Diversification Opportunities for LOreal SA and AMG Advanced
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LOreal and AMG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and LOreal 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 LOreal SA are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of LOreal SA i.e., LOreal SA and AMG Advanced go up and down completely randomly.
Pair Corralation between LOreal SA and AMG Advanced
Assuming the 90 days trading horizon LOreal SA is expected to generate 0.56 times more return on investment than AMG Advanced. However, LOreal SA is 1.78 times less risky than AMG Advanced. It trades about 0.08 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.07 per unit of risk. If you would invest 33,750 in LOreal SA on September 12, 2024 and sell it today you would earn a total of 675.00 from holding LOreal SA or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| LOreal SA |
| AMG Advanced Metallu |
LOreal SA and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and AMG Advanced
The main advantage of trading using opposite LOreal SA and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| LOreal SA vs. Griffin Mining | LOreal SA vs. Hochschild Mining plc | LOreal SA vs. Norwegian Air Shuttle | LOreal SA vs. National Beverage Corp |
| AMG Advanced vs. Neometals | AMG Advanced vs. Bisichi Mining PLC | AMG Advanced vs. Playtech Plc | AMG Advanced vs. Metals Exploration Plc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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