Correlation Between Groupe LDLC and Mediantechn
Can any of the company-specific risk be diversified away by investing in both Groupe LDLC and Mediantechn 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 Groupe LDLC and Mediantechn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groupe LDLC SA and Mediantechn, you can compare the effects of market volatilities on Groupe LDLC and Mediantechn 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 Groupe LDLC with a short position of Mediantechn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupe LDLC and Mediantechn.
Diversification Opportunities for Groupe LDLC and Mediantechn
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groupe and Mediantechn is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Groupe LDLC SA and Mediantechn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediantechn and Groupe LDLC 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 Groupe LDLC SA are associated (or correlated) with Mediantechn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediantechn has no effect on the direction of Groupe LDLC i.e., Groupe LDLC and Mediantechn go up and down completely randomly.
Pair Corralation between Groupe LDLC and Mediantechn
Assuming the 90 days trading horizon Groupe LDLC SA is expected to under-perform the Mediantechn. But the stock apears to be less risky and, when comparing its historical volatility, Groupe LDLC SA is 2.13 times less risky than Mediantechn. The stock trades about -0.04 of its potential returns per unit of risk. The Mediantechn is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 884.00 in Mediantechn on September 19, 2024 and sell it today you would lose (519.00) from holding Mediantechn or give up 58.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Groupe LDLC SA vs. Mediantechn
Performance |
| Timeline |
| Groupe LDLC SA |
| Mediantechn |
Groupe LDLC and Mediantechn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupe LDLC and Mediantechn
The main advantage of trading using opposite Groupe LDLC and Mediantechn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupe LDLC position performs unexpectedly, Mediantechn 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 Mediantechn will offset losses from the drop in Mediantechn's long position.| Groupe LDLC vs. OVH Groupe SAS | Groupe LDLC vs. Aramis SAS | Groupe LDLC vs. Neoen SA | Groupe LDLC vs. Technip Energies BV |
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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