Correlation Between LOreal SA and Socit BIC
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Socit BIC 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 Socit BIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Socit BIC SA, you can compare the effects of market volatilities on LOreal SA and Socit BIC 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 Socit BIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Socit BIC.
Diversification Opportunities for LOreal SA and Socit BIC
Pay attention - limited upside
The 3 months correlation between LOreal and Socit is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Socit BIC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit BIC 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 Socit BIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit BIC SA has no effect on the direction of LOreal SA i.e., LOreal SA and Socit BIC go up and down completely randomly.
Pair Corralation between LOreal SA and Socit BIC
Assuming the 90 days horizon LOreal SA is expected to under-perform the Socit BIC. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 2.13 times less risky than Socit BIC. The stock trades about -0.39 of its potential returns per unit of risk. The Socit BIC SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,900 in Socit BIC SA on August 23, 2024 and sell it today you would earn a total of 380.00 from holding Socit BIC SA or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. Socit BIC SA
Performance |
| Timeline |
| LOreal SA |
| Socit BIC SA |
LOreal SA and Socit BIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Socit BIC
The main advantage of trading using opposite LOreal SA and Socit BIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Socit BIC 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 Socit BIC will offset losses from the drop in Socit BIC'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 |
| Socit BIC vs. Imerys SA | Socit BIC vs. Casino Guichard Perrachon | Socit BIC vs. SEB SA | Socit BIC vs. Mtropole Tlvision 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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