Correlation Between Lectra SA and Alten SA
Can any of the company-specific risk be diversified away by investing in both Lectra SA and Alten SA 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 Lectra SA and Alten SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lectra SA and Alten SA, you can compare the effects of market volatilities on Lectra SA and Alten SA 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 Lectra SA with a short position of Alten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lectra SA and Alten SA.
Diversification Opportunities for Lectra SA and Alten SA
Poor diversification
The 3 months correlation between Lectra and Alten is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lectra SA and Alten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alten SA and Lectra 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 Lectra SA are associated (or correlated) with Alten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alten SA has no effect on the direction of Lectra SA i.e., Lectra SA and Alten SA go up and down completely randomly.
Pair Corralation between Lectra SA and Alten SA
Assuming the 90 days trading horizon Lectra SA is expected to generate 1.57 times more return on investment than Alten SA. However, Lectra SA is 1.57 times more volatile than Alten SA. It trades about 0.21 of its potential returns per unit of risk. Alten SA is currently generating about -0.14 per unit of risk. If you would invest 2,475 in Lectra SA on August 30, 2024 and sell it today you would earn a total of 325.00 from holding Lectra SA or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lectra SA vs. Alten SA
Performance |
| Timeline |
| Lectra SA |
| Alten SA |
Lectra SA and Alten SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lectra SA and Alten SA
The main advantage of trading using opposite Lectra SA and Alten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lectra SA position performs unexpectedly, Alten SA 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 Alten SA will offset losses from the drop in Alten SA's long position.| Lectra SA vs. Linedata Services SA | Lectra SA vs. Interparfums SA | Lectra SA vs. Esker SA | Lectra SA vs. Neurones |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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