Correlation Between Christian Dior and Lectricite

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

By analyzing existing cross correlation between Christian Dior SE and lectricite de Strasbourg, you can compare the effects of market volatilities on Christian Dior and Lectricite 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 Christian Dior with a short position of Lectricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Christian Dior and Lectricite.

Diversification Opportunities for Christian Dior and Lectricite

0.74

Correlation Coefficient

Christian Dior  Lectricite

Poor diversification

The 3 months correlation between Christian and Lectricite is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and lectricite de Strasbourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on lectricite de Strasbourg and Christian Dior 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 Christian Dior SE are associated (or correlated) with Lectricite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of lectricite de Strasbourg has no effect on the direction of Christian Dior i.e., Christian Dior and Lectricite go up and down completely randomly.

Pair Corralation between Christian Dior and Lectricite

Assuming the 90 days trading horizon Christian Dior is expected to generate 1.83 times less return on investment than Lectricite. In addition to that, Christian Dior is 1.63 times more volatile than lectricite de Strasbourg. It trades about 0.11 of its total potential returns per unit of risk. lectricite de Strasbourg is currently generating about 0.32 per unit of volatility. If you would invest  11,050  in lectricite de Strasbourg on December 1, 2024 and sell it today you would earn a total of  2,850  from holding lectricite de Strasbourg or generate 25.79% return on investment over 90 days.

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

Christian Dior SE  vs.  lectricite de Strasbourg

Christian Dior SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Christian Dior sustained solid returns over the last few months and may actually be approaching a breakup point.

lectricite de Strasbourg

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in lectricite de Strasbourg are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lectricite sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Christian Dior and Lectricite

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

The idea behind Christian Dior SE and lectricite de Strasbourg 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 CEOs Directory module to screen CEOs from public companies around the world.