Correlation Between Societe LDC and Bonduelle SCA
Can any of the company-specific risk be diversified away by investing in both Societe LDC and Bonduelle SCA 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 Bonduelle SCA 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 Bonduelle SCA, you can compare the effects of market volatilities on Societe LDC and Bonduelle SCA 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 Bonduelle SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe LDC and Bonduelle SCA.
Diversification Opportunities for Societe LDC and Bonduelle SCA
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Societe and Bonduelle is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Societe LDC SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA 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 Bonduelle SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonduelle SCA has no effect on the direction of Societe LDC i.e., Societe LDC and Bonduelle SCA go up and down completely randomly.
Pair Corralation between Societe LDC and Bonduelle SCA
Assuming the 90 days trading horizon Societe LDC SA is expected to generate 1.08 times more return on investment than Bonduelle SCA. However, Societe LDC is 1.08 times more volatile than Bonduelle SCA. It trades about -0.06 of its potential returns per unit of risk. Bonduelle SCA is currently generating about -0.27 per unit of risk. If you would invest 6,711 in Societe LDC SA on September 3, 2024 and sell it today you would lose (111.00) from holding Societe LDC SA or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Societe LDC SA vs. Bonduelle SCA
Performance |
| Timeline |
| Societe LDC SA |
| Bonduelle SCA |
Societe LDC and Bonduelle SCA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe LDC and Bonduelle SCA
The main advantage of trading using opposite Societe LDC and Bonduelle SCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe LDC position performs unexpectedly, Bonduelle SCA 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 Bonduelle SCA will offset losses from the drop in Bonduelle SCA's long position.| Societe LDC vs. Stef SA | Societe LDC vs. Bonduelle SCA | Societe LDC vs. Lisi SA | Societe LDC vs. Interparfums SA |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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