Correlation Between Societe LDC and Sapmer
Can any of the company-specific risk be diversified away by investing in both Societe LDC and Sapmer 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 Societe LDC and Sapmer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Societe LDC SA and Sapmer, you can compare the effects of market volatilities on Societe LDC and Sapmer 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 Societe LDC with a short position of Sapmer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe LDC and Sapmer.
Diversification Opportunities for Societe LDC and Sapmer
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Societe and Sapmer is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Societe LDC SA and Sapmer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapmer and Societe LDC 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 Societe LDC SA are associated (or correlated) with Sapmer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapmer has no effect on the direction of Societe LDC i.e., Societe LDC and Sapmer go up and down completely randomly.
Pair Corralation between Societe LDC and Sapmer
Assuming the 90 days trading horizon Societe LDC SA is expected to under-perform the Sapmer. But the stock apears to be less risky and, when comparing its historical volatility, Societe LDC SA is 2.48 times less risky than Sapmer. The stock trades about -0.01 of its potential returns per unit of risk. The Sapmer is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 720.00 in Sapmer on September 14, 2024 and sell it today you would lose (5.00) from holding Sapmer or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Societe LDC SA vs. Sapmer
Performance |
| Timeline |
| Societe LDC SA |
| Sapmer |
Societe LDC and Sapmer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe LDC and Sapmer
The main advantage of trading using opposite Societe LDC and Sapmer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe LDC position performs unexpectedly, Sapmer 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 Sapmer will offset losses from the drop in Sapmer's long position.| Societe LDC vs. Stef SA | Societe LDC vs. Bonduelle SCA | Societe LDC vs. Interparfums SA | Societe LDC vs. Manitou BF SA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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