Correlation Between Arkema SA and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Arkema SA and Legrand 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 Arkema SA and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arkema SA and Legrand SA, you can compare the effects of market volatilities on Arkema SA and Legrand 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 Arkema SA with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and Legrand SA.
Diversification Opportunities for Arkema SA and Legrand SA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arkema and Legrand is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA and Arkema 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 Arkema SA are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA has no effect on the direction of Arkema SA i.e., Arkema SA and Legrand SA go up and down completely randomly.
Pair Corralation between Arkema SA and Legrand SA
Assuming the 90 days trading horizon Arkema SA is expected to generate 6.62 times less return on investment than Legrand SA. In addition to that, Arkema SA is 1.23 times more volatile than Legrand SA. It trades about 0.01 of its total potential returns per unit of risk. Legrand SA is currently generating about 0.04 per unit of volatility. If you would invest 7,511 in Legrand SA on August 31, 2024 and sell it today you would earn a total of 1,945 from holding Legrand SA or generate 25.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arkema SA vs. Legrand SA
Performance |
| Timeline |
| Arkema SA |
| Legrand SA |
Arkema SA and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and Legrand SA
The main advantage of trading using opposite Arkema SA and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, Legrand 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Arkema SA vs. Legrand SA | Arkema SA vs. Eiffage SA | Arkema SA vs. Imerys SA | Arkema SA vs. Bureau Veritas SA |
| Legrand SA vs. Schneider Electric SE | Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |