Correlation Between EssilorLuxottica and Bd Multimedia

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

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

Diversification Opportunities for EssilorLuxottica and Bd Multimedia

-0.33

Correlation Coefficient

EssilorLuxottica  Bd Multimedia

Very good diversification

The 3 months correlation between EssilorLuxottica and ALBDM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica S A and Bd Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bd Multimedia and EssilorLuxottica 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 EssilorLuxottica S A are associated (or correlated) with Bd Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bd Multimedia has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Bd Multimedia go up and down completely randomly.

Pair Corralation between EssilorLuxottica and Bd Multimedia

Assuming the 90 days horizon EssilorLuxottica S A is expected to generate 0.1 times more return on investment than Bd Multimedia. However, EssilorLuxottica S A is 10.08 times less risky than Bd Multimedia. It trades about 0.1 of its potential returns per unit of risk. Bd Multimedia is currently generating about 0.01 per unit of risk. If you would invest  23,130  in EssilorLuxottica S A on October 12, 2024 and sell it today you would earn a total of  380.00  from holding EssilorLuxottica S A or generate 1.64% return on investment over 90 days.

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

EssilorLuxottica S A  vs.  Bd Multimedia

EssilorLuxottica S

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EssilorLuxottica S A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EssilorLuxottica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bd Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bd Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with EssilorLuxottica and Bd Multimedia

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

The idea behind EssilorLuxottica S A and Bd Multimedia 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.