Correlation Between Lacroix Group and Kalray SA
Can any of the company-specific risk be diversified away by investing in both Lacroix Group and Kalray 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 Lacroix Group and Kalray SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lacroix Group SA and Kalray SA, you can compare the effects of market volatilities on Lacroix Group and Kalray 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 Lacroix Group with a short position of Kalray SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lacroix Group and Kalray SA.
Diversification Opportunities for Lacroix Group and Kalray SA
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lacroix and Kalray is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lacroix Group SA and Kalray SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalray SA and Lacroix Group 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 Lacroix Group SA are associated (or correlated) with Kalray SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalray SA has no effect on the direction of Lacroix Group i.e., Lacroix Group and Kalray SA go up and down completely randomly.
Pair Corralation between Lacroix Group and Kalray SA
Assuming the 90 days trading horizon Lacroix Group SA is expected to generate 0.41 times more return on investment than Kalray SA. However, Lacroix Group SA is 2.44 times less risky than Kalray SA. It trades about -0.08 of its potential returns per unit of risk. Kalray SA is currently generating about -0.09 per unit of risk. If you would invest 2,954 in Lacroix Group SA on August 27, 2024 and sell it today you would lose (1,834) from holding Lacroix Group SA or give up 62.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lacroix Group SA vs. Kalray SA
Performance |
| Timeline |
| Lacroix Group SA |
| Kalray SA |
Lacroix Group and Kalray SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lacroix Group and Kalray SA
The main advantage of trading using opposite Lacroix Group and Kalray SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lacroix Group position performs unexpectedly, Kalray 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 Kalray SA will offset losses from the drop in Kalray SA's long position.The idea behind Lacroix Group SA and Kalray SA 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.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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