Correlation Between LOreal SA and La Savonnerie
Can any of the company-specific risk be diversified away by investing in both LOreal SA and La Savonnerie 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 La Savonnerie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and La Savonnerie de, you can compare the effects of market volatilities on LOreal SA and La Savonnerie 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 La Savonnerie. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and La Savonnerie.
Diversification Opportunities for LOreal SA and La Savonnerie
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LOreal and MLSDN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and La Savonnerie de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Savonnerie de 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 La Savonnerie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Savonnerie de has no effect on the direction of LOreal SA i.e., LOreal SA and La Savonnerie go up and down completely randomly.
Pair Corralation between LOreal SA and La Savonnerie
Assuming the 90 days horizon LOreal SA is expected to under-perform the La Savonnerie. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 2.09 times less risky than La Savonnerie. The stock trades about -0.23 of its potential returns per unit of risk. The La Savonnerie de is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,500 in La Savonnerie de on August 29, 2024 and sell it today you would earn a total of 480.00 from holding La Savonnerie de or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LOreal SA vs. La Savonnerie de
Performance |
| Timeline |
| LOreal SA |
| La Savonnerie de |
LOreal SA and La Savonnerie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and La Savonnerie
The main advantage of trading using opposite LOreal SA and La Savonnerie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, La Savonnerie 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 La Savonnerie will offset losses from the drop in La Savonnerie'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 |
| La Savonnerie vs. Poulaillon SA | La Savonnerie vs. Poujoulat SA | La Savonnerie vs. Trilogiq | La Savonnerie vs. Sergeferrari G |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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