Correlation Between Powerstorm Holdings and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Powerstorm Holdings and Legrand 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 Powerstorm Holdings and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powerstorm Holdings and Legrand SA ADR, you can compare the effects of market volatilities on Powerstorm Holdings and Legrand 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 Powerstorm Holdings with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powerstorm Holdings and Legrand SA.
Diversification Opportunities for Powerstorm Holdings and Legrand SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Powerstorm and Legrand is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Powerstorm Holdings and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR and Powerstorm Holdings 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 Powerstorm Holdings are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA ADR has no effect on the direction of Powerstorm Holdings i.e., Powerstorm Holdings and Legrand SA go up and down completely randomly.
Pair Corralation between Powerstorm Holdings and Legrand SA
Given the investment horizon of 90 days Powerstorm Holdings is expected to under-perform the Legrand SA. In addition to that, Powerstorm Holdings is 9.79 times more volatile than Legrand SA ADR. It trades about -0.04 of its total potential returns per unit of risk. Legrand SA ADR is currently generating about -0.24 per unit of volatility. If you would invest 2,131 in Legrand SA ADR on September 12, 2024 and sell it today you would lose (131.00) from holding Legrand SA ADR or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Powerstorm Holdings vs. Legrand SA ADR
Performance |
| Timeline |
| Powerstorm Holdings |
| Legrand SA ADR |
Powerstorm Holdings and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powerstorm Holdings and Legrand SA
The main advantage of trading using opposite Powerstorm Holdings and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powerstorm Holdings position performs unexpectedly, Legrand 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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