Correlation Between Lectricite and Methanor
Can any of the company-specific risk be diversified away by investing in both Lectricite and Methanor 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 Lectricite and Methanor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between lectricite de Strasbourg and Methanor, you can compare the effects of market volatilities on Lectricite and Methanor 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 Lectricite with a short position of Methanor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lectricite and Methanor.
Diversification Opportunities for Lectricite and Methanor
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lectricite and Methanor is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding lectricite de Strasbourg and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Lectricite 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 lectricite de Strasbourg are associated (or correlated) with Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Lectricite i.e., Lectricite and Methanor go up and down completely randomly.
Pair Corralation between Lectricite and Methanor
Assuming the 90 days trading horizon lectricite de Strasbourg is expected to generate 0.3 times more return on investment than Methanor. However, lectricite de Strasbourg is 3.34 times less risky than Methanor. It trades about 0.03 of its potential returns per unit of risk. Methanor is currently generating about -0.06 per unit of risk. If you would invest 10,555 in lectricite de Strasbourg on September 1, 2024 and sell it today you would earn a total of 495.00 from holding lectricite de Strasbourg or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.48% |
| Values | Daily Returns |
lectricite de Strasbourg vs. Methanor
Performance |
| Timeline |
| lectricite de Strasbourg |
| Methanor |
Lectricite and Methanor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lectricite and Methanor
The main advantage of trading using opposite Lectricite and Methanor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lectricite position performs unexpectedly, Methanor 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 Methanor will offset losses from the drop in Methanor's long position.| Lectricite vs. Thermador Groupe SA | Lectricite vs. Burelle SA | Lectricite vs. Interparfums SA | Lectricite vs. Societe LDC SA |
| Methanor vs. Voltalia SA | Methanor vs. Ecoslops SA | Methanor vs. Agripower France Sa | Methanor vs. Glob Bioenergi |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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