Correlation Between CFM Indosuez and Societe LDC
Can any of the company-specific risk be diversified away by investing in both CFM Indosuez and Societe LDC 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 CFM Indosuez and Societe LDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CFM Indosuez Wealth and Societe LDC SA, you can compare the effects of market volatilities on CFM Indosuez and Societe LDC 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 CFM Indosuez with a short position of Societe LDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFM Indosuez and Societe LDC.
Diversification Opportunities for CFM Indosuez and Societe LDC
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CFM and Societe is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CFM Indosuez Wealth and Societe LDC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe LDC SA and CFM Indosuez 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 CFM Indosuez Wealth are associated (or correlated) with Societe LDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe LDC SA has no effect on the direction of CFM Indosuez i.e., CFM Indosuez and Societe LDC go up and down completely randomly.
Pair Corralation between CFM Indosuez and Societe LDC
Assuming the 90 days trading horizon CFM Indosuez Wealth is expected to generate 3.77 times more return on investment than Societe LDC. However, CFM Indosuez is 3.77 times more volatile than Societe LDC SA. It trades about 0.04 of its potential returns per unit of risk. Societe LDC SA is currently generating about 0.04 per unit of risk. If you would invest 100,000 in CFM Indosuez Wealth on August 30, 2024 and sell it today you would earn a total of 15,000 from holding CFM Indosuez Wealth or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.27% |
| Values | Daily Returns |
CFM Indosuez Wealth vs. Societe LDC SA
Performance |
| Timeline |
| CFM Indosuez Wealth |
| Societe LDC SA |
CFM Indosuez and Societe LDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFM Indosuez and Societe LDC
The main advantage of trading using opposite CFM Indosuez and Societe LDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFM Indosuez position performs unexpectedly, Societe LDC 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 Societe LDC will offset losses from the drop in Societe LDC's long position.| CFM Indosuez vs. Caisse rgionale de | CFM Indosuez vs. Caisse Regionale de | CFM Indosuez vs. Caisse Rgionale du | CFM Indosuez vs. Caisse Regionale de |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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