Correlation Between Interparfums and Societe LDC
Can any of the company-specific risk be diversified away by investing in both Interparfums and Societe LDC 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 Interparfums and Societe LDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interparfums SA and Societe LDC SA, you can compare the effects of market volatilities on Interparfums and Societe LDC 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 Interparfums with a short position of Societe LDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interparfums and Societe LDC.
Diversification Opportunities for Interparfums and Societe LDC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interparfums and Societe is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and Societe LDC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe LDC SA and Interparfums 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 Interparfums SA are associated (or correlated) with Societe LDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe LDC SA has no effect on the direction of Interparfums i.e., Interparfums and Societe LDC go up and down completely randomly.
Pair Corralation between Interparfums and Societe LDC
Assuming the 90 days trading horizon Interparfums SA is expected to under-perform the Societe LDC. In addition to that, Interparfums is 1.62 times more volatile than Societe LDC SA. It trades about -0.18 of its total potential returns per unit of risk. Societe LDC SA is currently generating about -0.24 per unit of volatility. If you would invest 6,750 in Societe LDC SA on August 30, 2024 and sell it today you would lose (382.00) from holding Societe LDC SA or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interparfums SA vs. Societe LDC SA
Performance |
| Timeline |
| Interparfums SA |
| Societe LDC SA |
Interparfums and Societe LDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interparfums and Societe LDC
The main advantage of trading using opposite Interparfums and Societe LDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interparfums position performs unexpectedly, Societe LDC 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 Societe LDC will offset losses from the drop in Societe LDC's long position.| Interparfums vs. Remy Cointreau | Interparfums vs. Alten SA | Interparfums vs. Gaztransport Technigaz SAS | Interparfums vs. Trigano SA |
| Societe LDC vs. Stef SA | Societe LDC vs. Bonduelle SCA | Societe LDC vs. Lisi SA | Societe LDC vs. Interparfums 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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