Correlation Between Europlasma and LNA Sante
Can any of the company-specific risk be diversified away by investing in both Europlasma and LNA Sante 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 Europlasma and LNA Sante into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europlasma SA and LNA Sante SA, you can compare the effects of market volatilities on Europlasma and LNA Sante 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 Europlasma with a short position of LNA Sante. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europlasma and LNA Sante.
Diversification Opportunities for Europlasma and LNA Sante
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Europlasma and LNA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and LNA Sante SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LNA Sante SA and Europlasma 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 Europlasma SA are associated (or correlated) with LNA Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LNA Sante SA has no effect on the direction of Europlasma i.e., Europlasma and LNA Sante go up and down completely randomly.
Pair Corralation between Europlasma and LNA Sante
Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the LNA Sante. In addition to that, Europlasma is 11.66 times more volatile than LNA Sante SA. It trades about -0.01 of its total potential returns per unit of risk. LNA Sante SA is currently generating about 0.0 per unit of volatility. If you would invest 2,689 in LNA Sante SA on September 3, 2024 and sell it today you would lose (329.00) from holding LNA Sante SA or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europlasma SA vs. LNA Sante SA
Performance |
| Timeline |
| Europlasma SA |
| LNA Sante SA |
Europlasma and LNA Sante Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europlasma and LNA Sante
The main advantage of trading using opposite Europlasma and LNA Sante positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europlasma position performs unexpectedly, LNA Sante 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 LNA Sante will offset losses from the drop in LNA Sante's long position.The idea behind Europlasma SA and LNA Sante 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.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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