Correlation Between LOreal SA and Enogia SAS
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Enogia SAS 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 LOreal SA and Enogia SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Enogia SAS, you can compare the effects of market volatilities on LOreal SA and Enogia SAS 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 LOreal SA with a short position of Enogia SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Enogia SAS.
Diversification Opportunities for LOreal SA and Enogia SAS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LOreal and Enogia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Enogia SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enogia SAS and LOreal 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 LOreal SA are associated (or correlated) with Enogia SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enogia SAS has no effect on the direction of LOreal SA i.e., LOreal SA and Enogia SAS go up and down completely randomly.
Pair Corralation between LOreal SA and Enogia SAS
Assuming the 90 days horizon LOreal SA is expected to generate 0.54 times more return on investment than Enogia SAS. However, LOreal SA is 1.85 times less risky than Enogia SAS. It trades about 0.0 of its potential returns per unit of risk. Enogia SAS is currently generating about -0.04 per unit of risk. If you would invest 34,472 in LOreal SA on August 30, 2024 and sell it today you would lose (1,187) from holding LOreal SA or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. Enogia SAS
Performance |
| Timeline |
| LOreal SA |
| Enogia SAS |
LOreal SA and Enogia SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Enogia SAS
The main advantage of trading using opposite LOreal SA and Enogia SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Enogia SAS 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 Enogia SAS will offset losses from the drop in Enogia SAS's long position.| LOreal SA vs. LVMH Mot Hennessy | LOreal SA vs. Danone SA | LOreal SA vs. Air Liquide SA | LOreal SA vs. Hermes International SCA |
| Enogia SAS vs. LVMH Mot Hennessy | Enogia SAS vs. LOreal SA | Enogia SAS vs. Hermes International SCA | Enogia SAS vs. Manitou BF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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