Correlation Between Burelle SA and Lhyfe SA

Can any of the company-specific risk be diversified away by investing in both Burelle SA and Lhyfe 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 Burelle SA and Lhyfe SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Burelle SA and Lhyfe SA, you can compare the effects of market volatilities on Burelle SA and Lhyfe 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 Burelle SA with a short position of Lhyfe SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burelle SA and Lhyfe SA.

Diversification Opportunities for Burelle SA and Lhyfe SA

0.46

Correlation Coefficient

Burelle SA  Lhyfe SA

Very weak diversification

The 3 months correlation between Burelle and Lhyfe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Burelle SA and Lhyfe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lhyfe SA and Burelle 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 Burelle SA are associated (or correlated) with Lhyfe SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lhyfe SA has no effect on the direction of Burelle SA i.e., Burelle SA and Lhyfe SA go up and down completely randomly.

Pair Corralation between Burelle SA and Lhyfe SA

Assuming the 90 days trading horizon Burelle SA is expected to generate 2.27 times less return on investment than Lhyfe SA. But when comparing it to its historical volatility, Burelle SA is 1.4 times less risky than Lhyfe SA. It trades about 0.04 of its potential returns per unit of risk. Lhyfe SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  298.00  in Lhyfe SA on December 30, 2024 and sell it today you would earn a total of  32.00  from holding Lhyfe SA or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Burelle SA  vs.  Lhyfe SA

Burelle SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burelle SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Burelle SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lhyfe SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lhyfe SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Lhyfe SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Burelle SA and Lhyfe SA

The main advantage of trading using opposite Burelle SA and Lhyfe SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burelle SA position performs unexpectedly, Lhyfe 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 Lhyfe SA will offset losses from the drop in Lhyfe SA's long position.

The idea behind Burelle SA and Lhyfe SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.