Correlation Between Cnova NV and Groupe LDLC
Can any of the company-specific risk be diversified away by investing in both Cnova NV and Groupe LDLC 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 Cnova NV and Groupe LDLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cnova NV and Groupe LDLC SA, you can compare the effects of market volatilities on Cnova NV and Groupe LDLC 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 Cnova NV with a short position of Groupe LDLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cnova NV and Groupe LDLC.
Diversification Opportunities for Cnova NV and Groupe LDLC
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cnova and Groupe is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cnova NV and Groupe LDLC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe LDLC SA and Cnova NV 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 Cnova NV are associated (or correlated) with Groupe LDLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe LDLC SA has no effect on the direction of Cnova NV i.e., Cnova NV and Groupe LDLC go up and down completely randomly.
Pair Corralation between Cnova NV and Groupe LDLC
Assuming the 90 days trading horizon Cnova NV is expected to generate 5.49 times more return on investment than Groupe LDLC. However, Cnova NV is 5.49 times more volatile than Groupe LDLC SA. It trades about 0.03 of its potential returns per unit of risk. Groupe LDLC SA is currently generating about -0.1 per unit of risk. If you would invest 226.00 in Cnova NV on September 1, 2024 and sell it today you would lose (146.00) from holding Cnova NV or give up 64.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Cnova NV vs. Groupe LDLC SA
Performance |
| Timeline |
| Cnova NV |
| Groupe LDLC SA |
Cnova NV and Groupe LDLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cnova NV and Groupe LDLC
The main advantage of trading using opposite Cnova NV and Groupe LDLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cnova NV position performs unexpectedly, Groupe LDLC 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 Groupe LDLC will offset losses from the drop in Groupe LDLC's long position.| Cnova NV vs. Casino Guichard Perrachon | Cnova NV vs. Rallye SA | Cnova NV vs. Carmila SA | Cnova NV vs. Burelle SA |
| Groupe LDLC vs. Piscines Desjoyaux SA | Groupe LDLC vs. Claranova SE | Groupe LDLC vs. Trigano SA | Groupe LDLC vs. Chargeurs SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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