Correlation Between Henkel Ag and LOral SA
Can any of the company-specific risk be diversified away by investing in both Henkel Ag and LOral 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 Henkel Ag and LOral SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henkel Ag A and LOral SA, you can compare the effects of market volatilities on Henkel Ag and LOral 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 Henkel Ag with a short position of LOral SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel Ag and LOral SA.
Diversification Opportunities for Henkel Ag and LOral SA
Almost no diversification
The 3 months correlation between Henkel and LOral is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Henkel Ag A and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA and Henkel Ag 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 Henkel Ag A are associated (or correlated) with LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Henkel Ag i.e., Henkel Ag and LOral SA go up and down completely randomly.
Pair Corralation between Henkel Ag and LOral SA
Assuming the 90 days horizon Henkel Ag A is expected to generate 0.59 times more return on investment than LOral SA. However, Henkel Ag A is 1.7 times less risky than LOral SA. It trades about 0.02 of its potential returns per unit of risk. LOral SA is currently generating about -0.02 per unit of risk. If you would invest 1,974 in Henkel Ag A on September 4, 2024 and sell it today you would earn a total of 160.00 from holding Henkel Ag A or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Henkel Ag A vs. LOral SA
Performance |
| Timeline |
| Henkel Ag A |
| LOral SA |
Henkel Ag and LOral SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henkel Ag and LOral SA
The main advantage of trading using opposite Henkel Ag and LOral SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henkel Ag position performs unexpectedly, LOral 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 LOral SA will offset losses from the drop in LOral SA's long position.| Henkel Ag vs. Beiersdorf Aktiengesellschaft | Henkel Ag vs. Essity AB | Henkel Ag vs. Hengan International Group | Henkel Ag vs. LOral SA |
| LOral SA vs. LOreal Co ADR | LOral SA vs. Unilever PLC ADR | LOral SA vs. Kimberly Clark | LOral SA vs. The Clorox |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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