Correlation Between Societe LDC and Lectricite
Can any of the company-specific risk be diversified away by investing in both Societe LDC and Lectricite 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 Lectricite 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 lectricite de Strasbourg, you can compare the effects of market volatilities on Societe LDC and Lectricite 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 Lectricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe LDC and Lectricite.
Diversification Opportunities for Societe LDC and Lectricite
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Societe and Lectricite is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Societe LDC SA and lectricite de Strasbourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on lectricite de Strasbourg 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 Lectricite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of lectricite de Strasbourg has no effect on the direction of Societe LDC i.e., Societe LDC and Lectricite go up and down completely randomly.
Pair Corralation between Societe LDC and Lectricite
Assuming the 90 days trading horizon Societe LDC SA is expected to under-perform the Lectricite. In addition to that, Societe LDC is 1.12 times more volatile than lectricite de Strasbourg. It trades about -0.06 of its total potential returns per unit of risk. lectricite de Strasbourg is currently generating about 0.12 per unit of volatility. If you would invest 10,750 in lectricite de Strasbourg on September 1, 2024 and sell it today you would earn a total of 300.00 from holding lectricite de Strasbourg or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Societe LDC SA vs. lectricite de Strasbourg
Performance |
| Timeline |
| Societe LDC SA |
| lectricite de Strasbourg |
Societe LDC and Lectricite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe LDC and Lectricite
The main advantage of trading using opposite Societe LDC and Lectricite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe LDC position performs unexpectedly, Lectricite 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 Lectricite will offset losses from the drop in Lectricite's long position.| Societe LDC vs. Stef SA | Societe LDC vs. Bonduelle SCA | Societe LDC vs. Lisi SA | Societe LDC vs. Interparfums SA |
| Lectricite vs. Thermador Groupe SA | Lectricite vs. Burelle SA | Lectricite vs. Interparfums SA | Lectricite vs. Societe LDC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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