Correlation Between Groupe LDLC and Derichebourg
Can any of the company-specific risk be diversified away by investing in both Groupe LDLC and Derichebourg 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 Derichebourg 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 Derichebourg, you can compare the effects of market volatilities on Groupe LDLC and Derichebourg 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 Derichebourg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupe LDLC and Derichebourg.
Diversification Opportunities for Groupe LDLC and Derichebourg
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groupe and Derichebourg is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Groupe LDLC SA and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg 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 Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Groupe LDLC i.e., Groupe LDLC and Derichebourg go up and down completely randomly.
Pair Corralation between Groupe LDLC and Derichebourg
Assuming the 90 days trading horizon Groupe LDLC SA is expected to under-perform the Derichebourg. In addition to that, Groupe LDLC is 1.24 times more volatile than Derichebourg. It trades about -0.37 of its total potential returns per unit of risk. Derichebourg is currently generating about -0.21 per unit of volatility. If you would invest 520.00 in Derichebourg on September 1, 2024 and sell it today you would lose (63.00) from holding Derichebourg or give up 12.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Groupe LDLC SA vs. Derichebourg
Performance |
| Timeline |
| Groupe LDLC SA |
| Derichebourg |
Groupe LDLC and Derichebourg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupe LDLC and Derichebourg
The main advantage of trading using opposite Groupe LDLC and Derichebourg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupe LDLC position performs unexpectedly, Derichebourg 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 Derichebourg will offset losses from the drop in Derichebourg's long position.| Groupe LDLC vs. Piscines Desjoyaux SA | Groupe LDLC vs. Claranova SE | Groupe LDLC vs. Trigano SA | Groupe LDLC vs. Chargeurs SA |
| Derichebourg vs. Eramet SA | Derichebourg vs. Trigano SA | Derichebourg vs. Soitec SA | Derichebourg vs. Rubis SCA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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