Correlation Between L’Oreal Co and Stephan
Can any of the company-specific risk be diversified away by investing in both L’Oreal Co and Stephan 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 L’Oreal Co and Stephan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal Co ADR and The Stephan Co, you can compare the effects of market volatilities on L’Oreal Co and Stephan 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 L’Oreal Co with a short position of Stephan. Check out your portfolio center. Please also check ongoing floating volatility patterns of L’Oreal Co and Stephan.
Diversification Opportunities for L’Oreal Co and Stephan
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between L’Oreal and Stephan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LOreal Co ADR and The Stephan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Stephan and L’Oreal Co 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 LOreal Co ADR are associated (or correlated) with Stephan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Stephan has no effect on the direction of L’Oreal Co i.e., L’Oreal Co and Stephan go up and down completely randomly.
Pair Corralation between L’Oreal Co and Stephan
If you would invest 164.00 in The Stephan Co on August 28, 2024 and sell it today you would earn a total of 0.00 from holding The Stephan Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
LOreal Co ADR vs. The Stephan Co
Performance |
| Timeline |
| LOreal Co ADR |
| The Stephan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
L’Oreal Co and Stephan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L’Oreal Co and Stephan
The main advantage of trading using opposite L’Oreal Co and Stephan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L’Oreal Co position performs unexpectedly, Stephan 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 Stephan will offset losses from the drop in Stephan's long position.| L’Oreal Co vs. Embotelladora Andina SA | L’Oreal Co vs. Signet International Holdings | L’Oreal Co vs. National Beverage Corp | L’Oreal Co vs. PT Astra International |
| Stephan vs. LOreal Co ADR | Stephan vs. Unilever PLC | Stephan vs. Estee Lauder Companies | Stephan vs. Church Dwight |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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