Correlation Between LOreal SA and Signaux Girod
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Signaux Girod 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 Signaux Girod into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Signaux Girod, you can compare the effects of market volatilities on LOreal SA and Signaux Girod 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 Signaux Girod. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Signaux Girod.
Diversification Opportunities for LOreal SA and Signaux Girod
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between LOreal and Signaux is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Signaux Girod in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signaux Girod 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 Signaux Girod. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signaux Girod has no effect on the direction of LOreal SA i.e., LOreal SA and Signaux Girod go up and down completely randomly.
Pair Corralation between LOreal SA and Signaux Girod
Assuming the 90 days horizon LOreal SA is expected to under-perform the Signaux Girod. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 1.46 times less risky than Signaux Girod. The stock trades about -0.16 of its potential returns per unit of risk. The Signaux Girod is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Signaux Girod on September 5, 2024 and sell it today you would lose (510.00) from holding Signaux Girod or give up 26.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
LOreal SA vs. Signaux Girod
Performance |
| Timeline |
| LOreal SA |
| Signaux Girod |
LOreal SA and Signaux Girod Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Signaux Girod
The main advantage of trading using opposite LOreal SA and Signaux Girod positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Signaux Girod 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 Signaux Girod will offset losses from the drop in Signaux Girod's long position.The idea behind LOreal SA and Signaux Girod 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.| Signaux Girod vs. LVMH Mot Hennessy | Signaux Girod vs. LOreal SA | Signaux Girod vs. Hermes International SCA | Signaux Girod 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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