Correlation Between La Francaise and OVH Groupe
Can any of the company-specific risk be diversified away by investing in both La Francaise and OVH Groupe 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 La Francaise and OVH Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Francaise Des and OVH Groupe SAS, you can compare the effects of market volatilities on La Francaise and OVH Groupe 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 La Francaise with a short position of OVH Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Francaise and OVH Groupe.
Diversification Opportunities for La Francaise and OVH Groupe
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FDJ and OVH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding La Francaise Des and OVH Groupe SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVH Groupe SAS and La Francaise 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 La Francaise Des are associated (or correlated) with OVH Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVH Groupe SAS has no effect on the direction of La Francaise i.e., La Francaise and OVH Groupe go up and down completely randomly.
Pair Corralation between La Francaise and OVH Groupe
Assuming the 90 days trading horizon La Francaise is expected to generate 4.73 times less return on investment than OVH Groupe. But when comparing it to its historical volatility, La Francaise Des is 2.03 times less risky than OVH Groupe. It trades about 0.07 of its potential returns per unit of risk. OVH Groupe SAS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 472.00 in OVH Groupe SAS on September 1, 2024 and sell it today you would earn a total of 378.00 from holding OVH Groupe SAS or generate 80.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
La Francaise Des vs. OVH Groupe SAS
Performance |
| Timeline |
| La Francaise Des |
| OVH Groupe SAS |
La Francaise and OVH Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Francaise and OVH Groupe
The main advantage of trading using opposite La Francaise and OVH Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Francaise position performs unexpectedly, OVH Groupe 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 OVH Groupe will offset losses from the drop in OVH Groupe's long position.The idea behind La Francaise Des and OVH Groupe SAS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| OVH Groupe vs. La Francaise Des | OVH Groupe vs. TotalEnergies SE | OVH Groupe vs. Worldline SA | OVH Groupe vs. Atos SE |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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