Correlation Between LOreal SA and ST Dupont
Can any of the company-specific risk be diversified away by investing in both LOreal SA and ST Dupont 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 ST Dupont into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and ST Dupont, you can compare the effects of market volatilities on LOreal SA and ST Dupont 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 ST Dupont. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and ST Dupont.
Diversification Opportunities for LOreal SA and ST Dupont
Poor diversification
The 3 months correlation between LOreal and DPT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and ST Dupont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Dupont 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 ST Dupont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Dupont has no effect on the direction of LOreal SA i.e., LOreal SA and ST Dupont go up and down completely randomly.
Pair Corralation between LOreal SA and ST Dupont
Assuming the 90 days horizon LOreal SA is expected to generate 52.11 times less return on investment than ST Dupont. But when comparing it to its historical volatility, LOreal SA is 3.0 times less risky than ST Dupont. It trades about 0.0 of its potential returns per unit of risk. ST Dupont is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 12.00 in ST Dupont on November 2, 2024 and sell it today you would lose (2.00) from holding ST Dupont or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
LOreal SA vs. ST Dupont
Performance |
| Timeline |
| LOreal SA |
| ST Dupont |
LOreal SA and ST Dupont Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and ST Dupont
The main advantage of trading using opposite LOreal SA and ST Dupont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, ST Dupont 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 ST Dupont will offset losses from the drop in ST Dupont'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 |
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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