Correlation Between Adocia and Groupe LDLC
Can any of the company-specific risk be diversified away by investing in both Adocia and Groupe LDLC 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 Adocia and Groupe LDLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adocia and Groupe LDLC SA, you can compare the effects of market volatilities on Adocia and Groupe LDLC 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 Adocia with a short position of Groupe LDLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and Groupe LDLC.
Diversification Opportunities for Adocia and Groupe LDLC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adocia and Groupe is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Groupe LDLC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe LDLC SA and Adocia 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 Adocia are associated (or correlated) with Groupe LDLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe LDLC SA has no effect on the direction of Adocia i.e., Adocia and Groupe LDLC go up and down completely randomly.
Pair Corralation between Adocia and Groupe LDLC
Assuming the 90 days trading horizon Adocia is expected to generate 2.13 times more return on investment than Groupe LDLC. However, Adocia is 2.13 times more volatile than Groupe LDLC SA. It trades about 0.06 of its potential returns per unit of risk. Groupe LDLC SA is currently generating about -0.04 per unit of risk. If you would invest 306.00 in Adocia on August 30, 2024 and sell it today you would earn a total of 513.00 from holding Adocia or generate 167.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adocia vs. Groupe LDLC SA
Performance |
| Timeline |
| Adocia |
| Groupe LDLC SA |
Adocia and Groupe LDLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adocia and Groupe LDLC
The main advantage of trading using opposite Adocia and Groupe LDLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adocia position performs unexpectedly, Groupe LDLC 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 Groupe LDLC will offset losses from the drop in Groupe LDLC's long position.The idea behind Adocia and Groupe LDLC 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.| Groupe LDLC vs. Piscines Desjoyaux SA | Groupe LDLC vs. Claranova SE | Groupe LDLC vs. Trigano SA | Groupe LDLC vs. Chargeurs SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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