Correlation Between LNA Sante and Trigano SA
Can any of the company-specific risk be diversified away by investing in both LNA Sante and Trigano 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 LNA Sante and Trigano SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LNA Sante SA and Trigano SA, you can compare the effects of market volatilities on LNA Sante and Trigano 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 LNA Sante with a short position of Trigano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LNA Sante and Trigano SA.
Diversification Opportunities for LNA Sante and Trigano SA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LNA and Trigano is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding LNA Sante SA and Trigano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigano SA and LNA Sante 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 LNA Sante SA are associated (or correlated) with Trigano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigano SA has no effect on the direction of LNA Sante i.e., LNA Sante and Trigano SA go up and down completely randomly.
Pair Corralation between LNA Sante and Trigano SA
Assuming the 90 days trading horizon LNA Sante SA is expected to generate 1.38 times more return on investment than Trigano SA. However, LNA Sante is 1.38 times more volatile than Trigano SA. It trades about -0.04 of its potential returns per unit of risk. Trigano SA is currently generating about -0.13 per unit of risk. If you would invest 2,415 in LNA Sante SA on September 1, 2024 and sell it today you would lose (55.00) from holding LNA Sante SA or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LNA Sante SA vs. Trigano SA
Performance |
| Timeline |
| LNA Sante SA |
| Trigano SA |
LNA Sante and Trigano SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LNA Sante and Trigano SA
The main advantage of trading using opposite LNA Sante and Trigano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LNA Sante position performs unexpectedly, Trigano 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 Trigano SA will offset losses from the drop in Trigano SA's long position.The idea behind LNA Sante SA and Trigano 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.| Trigano SA vs. Mediantechn | Trigano SA vs. Gaztransport Technigaz SAS | Trigano SA vs. DONTNOD Entertainment SA | Trigano SA vs. Union Technologies Informatique |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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