Correlation Between LOreal SA and Ekinops SA
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Ekinops SA 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 Ekinops SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Ekinops SA, you can compare the effects of market volatilities on LOreal SA and Ekinops SA 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 Ekinops SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Ekinops SA.
Diversification Opportunities for LOreal SA and Ekinops SA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LOreal and Ekinops is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Ekinops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekinops 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 Ekinops SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekinops SA has no effect on the direction of LOreal SA i.e., LOreal SA and Ekinops SA go up and down completely randomly.
Pair Corralation between LOreal SA and Ekinops SA
Assuming the 90 days horizon LOreal SA is expected to under-perform the Ekinops SA. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 1.43 times less risky than Ekinops SA. The stock trades about -0.33 of its potential returns per unit of risk. The Ekinops SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 412.00 in Ekinops SA on August 24, 2024 and sell it today you would lose (20.00) from holding Ekinops SA or give up 4.85% 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. Ekinops SA
Performance |
| Timeline |
| LOreal SA |
| Ekinops SA |
LOreal SA and Ekinops SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Ekinops SA
The main advantage of trading using opposite LOreal SA and Ekinops SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Ekinops SA 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 Ekinops SA will offset losses from the drop in Ekinops SA'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 |
| Ekinops SA vs. Sartorius Stedim Biotech | Ekinops SA vs. Lectra SA | Ekinops SA vs. Teleperformance SE | Ekinops SA vs. Trigano 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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