Correlation Between Boiron SA and Lectra SA
Can any of the company-specific risk be diversified away by investing in both Boiron SA and Lectra 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 Boiron SA and Lectra SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boiron SA and Lectra SA, you can compare the effects of market volatilities on Boiron SA and Lectra 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 Boiron SA with a short position of Lectra SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boiron SA and Lectra SA.
Diversification Opportunities for Boiron SA and Lectra SA
Good diversification
The 3 months correlation between Boiron and Lectra is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Lectra SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lectra SA and Boiron 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 Boiron SA are associated (or correlated) with Lectra SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lectra SA has no effect on the direction of Boiron SA i.e., Boiron SA and Lectra SA go up and down completely randomly.
Pair Corralation between Boiron SA and Lectra SA
Assuming the 90 days trading horizon Boiron SA is expected to under-perform the Lectra SA. But the stock apears to be less risky and, when comparing its historical volatility, Boiron SA is 1.71 times less risky than Lectra SA. The stock trades about -0.52 of its potential returns per unit of risk. The Lectra SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,475 in Lectra SA on August 30, 2024 and sell it today you would earn a total of 325.00 from holding Lectra SA or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boiron SA vs. Lectra SA
Performance |
| Timeline |
| Boiron SA |
| Lectra SA |
Boiron SA and Lectra SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boiron SA and Lectra SA
The main advantage of trading using opposite Boiron SA and Lectra SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boiron SA position performs unexpectedly, Lectra 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 Lectra SA will offset losses from the drop in Lectra SA's long position.| Boiron SA vs. Bonduelle SCA | Boiron SA vs. Biomerieux SA | Boiron SA vs. Guerbet S A | Boiron SA vs. Socit BIC SA |
| Lectra SA vs. Linedata Services SA | Lectra SA vs. Interparfums SA | Lectra SA vs. Esker SA | Lectra SA vs. Neurones |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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