Correlation Between Compagnie Des and Lectricite
Can any of the company-specific risk be diversified away by investing in both Compagnie Des 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 Compagnie Des and Lectricite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie des Eaux and lectricite de Strasbourg, you can compare the effects of market volatilities on Compagnie Des 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 Compagnie Des with a short position of Lectricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Des and Lectricite.
Diversification Opportunities for Compagnie Des and Lectricite
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compagnie and Lectricite is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Eaux 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 Compagnie Des 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 Compagnie des Eaux 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 Compagnie Des i.e., Compagnie Des and Lectricite go up and down completely randomly.
Pair Corralation between Compagnie Des and Lectricite
Assuming the 90 days trading horizon Compagnie des Eaux is expected to under-perform the Lectricite. In addition to that, Compagnie Des is 3.25 times more volatile than lectricite de Strasbourg. It trades about -0.09 of its total potential returns per unit of risk. lectricite de Strasbourg is currently generating about 0.01 per unit of volatility. If you would invest 11,018 in lectricite de Strasbourg on August 29, 2024 and sell it today you would earn a total of 132.00 from holding lectricite de Strasbourg or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Compagnie des Eaux vs. lectricite de Strasbourg
Performance |
| Timeline |
| Compagnie des Eaux |
| lectricite de Strasbourg |
Compagnie Des and Lectricite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Des and Lectricite
The main advantage of trading using opposite Compagnie Des and Lectricite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Des 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.The idea behind Compagnie des Eaux and lectricite de Strasbourg pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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