Correlation Between LOral SA and Ontex Group
Can any of the company-specific risk be diversified away by investing in both LOral SA and Ontex Group 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 LOral SA and Ontex Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOral SA and Ontex Group NV, you can compare the effects of market volatilities on LOral SA and Ontex Group 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 LOral SA with a short position of Ontex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOral SA and Ontex Group.
Diversification Opportunities for LOral SA and Ontex Group
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LOral and Ontex is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding LOral SA and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV and LOral 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 LOral SA are associated (or correlated) with Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of LOral SA i.e., LOral SA and Ontex Group go up and down completely randomly.
Pair Corralation between LOral SA and Ontex Group
Assuming the 90 days horizon LOral SA is expected to under-perform the Ontex Group. But the stock apears to be less risky and, when comparing its historical volatility, LOral SA is 1.18 times less risky than Ontex Group. The stock trades about -0.07 of its potential returns per unit of risk. The Ontex Group NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 697.00 in Ontex Group NV on August 27, 2024 and sell it today you would earn a total of 57.00 from holding Ontex Group NV or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOral SA vs. Ontex Group NV
Performance |
| Timeline |
| LOral SA |
| Ontex Group NV |
LOral SA and Ontex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOral SA and Ontex Group
The main advantage of trading using opposite LOral SA and Ontex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOral SA position performs unexpectedly, Ontex Group 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 Ontex Group will offset losses from the drop in Ontex Group's long position.| LOral SA vs. The Procter Gamble | LOral SA vs. Superior Plus Corp | LOral SA vs. Origin Agritech | LOral SA vs. Identiv |
| Ontex Group vs. The Procter Gamble | Ontex Group vs. Superior Plus Corp | Ontex Group vs. Origin Agritech | Ontex Group vs. Identiv |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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