Correlation Between Sabien Technology and LOreal SA
Can any of the company-specific risk be diversified away by investing in both Sabien Technology and LOreal 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 Sabien Technology and LOreal SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabien Technology Group and LOreal SA, you can compare the effects of market volatilities on Sabien Technology and LOreal 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 Sabien Technology with a short position of LOreal SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabien Technology and LOreal SA.
Diversification Opportunities for Sabien Technology and LOreal SA
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabien and LOreal is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sabien Technology Group and LOreal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOreal SA and Sabien Technology 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 Sabien Technology Group are associated (or correlated) with LOreal SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOreal SA has no effect on the direction of Sabien Technology i.e., Sabien Technology and LOreal SA go up and down completely randomly.
Pair Corralation between Sabien Technology and LOreal SA
Assuming the 90 days trading horizon Sabien Technology Group is expected to generate 2.33 times more return on investment than LOreal SA. However, Sabien Technology is 2.33 times more volatile than LOreal SA. It trades about 0.15 of its potential returns per unit of risk. LOreal SA is currently generating about -0.15 per unit of risk. If you would invest 825.00 in Sabien Technology Group on September 2, 2024 and sell it today you would earn a total of 350.00 from holding Sabien Technology Group or generate 42.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabien Technology Group vs. LOreal SA
Performance |
| Timeline |
| Sabien Technology |
| LOreal SA |
Sabien Technology and LOreal SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabien Technology and LOreal SA
The main advantage of trading using opposite Sabien Technology and LOreal SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabien Technology position performs unexpectedly, LOreal 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 LOreal SA will offset losses from the drop in LOreal SA's long position.| Sabien Technology vs. Samsung Electronics Co | Sabien Technology vs. Samsung Electronics Co | Sabien Technology vs. Hyundai Motor | Sabien Technology vs. Toyota Motor Corp |
| LOreal SA vs. Litigation Capital Management | LOreal SA vs. Foresight Environmental Infrastructure | LOreal SA vs. Seche Environnement SA | LOreal SA vs. Batm Advanced Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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