Correlation Between Legrand SA and ADS TEC
Can any of the company-specific risk be diversified away by investing in both Legrand SA and ADS TEC 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 Legrand SA and ADS TEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA ADR and ADS TEC ENERGY PLC, you can compare the effects of market volatilities on Legrand SA and ADS TEC 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 Legrand SA with a short position of ADS TEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and ADS TEC.
Diversification Opportunities for Legrand SA and ADS TEC
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legrand and ADS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and ADS TEC ENERGY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS TEC ENERGY and Legrand SA 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 Legrand SA ADR are associated (or correlated) with ADS TEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS TEC ENERGY has no effect on the direction of Legrand SA i.e., Legrand SA and ADS TEC go up and down completely randomly.
Pair Corralation between Legrand SA and ADS TEC
Assuming the 90 days horizon Legrand SA ADR is expected to under-perform the ADS TEC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Legrand SA ADR is 103.64 times less risky than ADS TEC. The pink sheet trades about -0.03 of its potential returns per unit of risk. The ADS TEC ENERGY PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 223.00 in ADS TEC ENERGY PLC on August 31, 2024 and sell it today you would earn a total of 119.00 from holding ADS TEC ENERGY PLC or generate 53.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.34% |
| Values | Daily Returns |
Legrand SA ADR vs. ADS TEC ENERGY PLC
Performance |
| Timeline |
| Legrand SA ADR |
| ADS TEC ENERGY |
Legrand SA and ADS TEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and ADS TEC
The main advantage of trading using opposite Legrand SA and ADS TEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, ADS TEC 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 ADS TEC will offset losses from the drop in ADS TEC's long position.| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Energizer Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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