Correlation Between Ilika Plc and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Ilika Plc and Legrand 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 Ilika Plc and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilika plc and Legrand SA ADR, you can compare the effects of market volatilities on Ilika Plc and Legrand 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 Ilika Plc with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilika Plc and Legrand SA.
Diversification Opportunities for Ilika Plc and Legrand SA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ilika and Legrand is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ilika plc and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR and Ilika Plc 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 Ilika plc are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA ADR has no effect on the direction of Ilika Plc i.e., Ilika Plc and Legrand SA go up and down completely randomly.
Pair Corralation between Ilika Plc and Legrand SA
Assuming the 90 days horizon Ilika plc is expected to generate 3.23 times more return on investment than Legrand SA. However, Ilika Plc is 3.23 times more volatile than Legrand SA ADR. It trades about 0.43 of its potential returns per unit of risk. Legrand SA ADR is currently generating about 0.22 per unit of risk. If you would invest 32.00 in Ilika plc on November 27, 2024 and sell it today you would earn a total of 25.00 from holding Ilika plc or generate 78.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilika plc vs. Legrand SA ADR
Performance |
| Timeline |
| Ilika plc |
| Legrand SA ADR |
Ilika Plc and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilika Plc and Legrand SA
The main advantage of trading using opposite Ilika Plc and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilika Plc position performs unexpectedly, Legrand 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Ilika Plc vs. Novonix Ltd ADR | Ilika Plc vs. Magnis Energy Technologies | Ilika Plc vs. Exro Technologies | Ilika Plc vs. FuelPositive Corp |
| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Signify NV |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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