Correlation Between LOreal SA and NSC Groupe
Can any of the company-specific risk be diversified away by investing in both LOreal SA and NSC Groupe 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 NSC Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and NSC Groupe SA, you can compare the effects of market volatilities on LOreal SA and NSC Groupe 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 NSC Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and NSC Groupe.
Diversification Opportunities for LOreal SA and NSC Groupe
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LOreal and NSC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and NSC Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSC Groupe SA 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 NSC Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSC Groupe SA has no effect on the direction of LOreal SA i.e., LOreal SA and NSC Groupe go up and down completely randomly.
Pair Corralation between LOreal SA and NSC Groupe
Assuming the 90 days horizon LOreal SA is expected to generate 0.37 times more return on investment than NSC Groupe. However, LOreal SA is 2.68 times less risky than NSC Groupe. It trades about -0.14 of its potential returns per unit of risk. NSC Groupe SA is currently generating about -0.12 per unit of risk. If you would invest 34,425 in LOreal SA on September 1, 2024 and sell it today you would lose (1,560) from holding LOreal SA or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. NSC Groupe SA
Performance |
| Timeline |
| LOreal SA |
| NSC Groupe SA |
LOreal SA and NSC Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and NSC Groupe
The main advantage of trading using opposite LOreal SA and NSC Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, NSC Groupe 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 NSC Groupe will offset losses from the drop in NSC Groupe'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 |
| NSC Groupe vs. Technip Energies BV | NSC Groupe vs. Credit Agricole SA | NSC Groupe vs. Mauna Kea Technologies | NSC Groupe vs. Eutelsat Communications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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