Correlation Between Legrand SA and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Asia Pacific 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 Asia Pacific 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 Asia Pacific Wire, you can compare the effects of market volatilities on Legrand SA and Asia Pacific 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 Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Asia Pacific.
Diversification Opportunities for Legrand SA and Asia Pacific
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legrand and Asia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of Legrand SA i.e., Legrand SA and Asia Pacific go up and down completely randomly.
Pair Corralation between Legrand SA and Asia Pacific
Assuming the 90 days horizon Legrand SA ADR is expected to under-perform the Asia Pacific. But the pink sheet apears to be less risky and, when comparing its historical volatility, Legrand SA ADR is 1.53 times less risky than Asia Pacific. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Asia Pacific Wire is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Asia Pacific Wire on August 28, 2024 and sell it today you would earn a total of 44.00 from holding Asia Pacific Wire or generate 28.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA ADR vs. Asia Pacific Wire
Performance |
| Timeline |
| Legrand SA ADR |
| Asia Pacific Wire |
Legrand SA and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Asia Pacific
The main advantage of trading using opposite Legrand SA and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
| Asia Pacific vs. Tantalus Systems Holding | Asia Pacific vs. Hydrogen Engine Center | Asia Pacific vs. Alfen NV | Asia Pacific vs. Legrand SA ADR |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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