Correlation Between Les Htels and Centrale DAchat

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

By analyzing existing cross correlation between Les Htels de and Centrale dAchat Franaise, you can compare the effects of market volatilities on Les Htels and Centrale DAchat 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 Les Htels with a short position of Centrale DAchat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Htels and Centrale DAchat.

Diversification Opportunities for Les Htels and Centrale DAchat

0.6

Correlation Coefficient

Les Htels  Centrale DAchat

Poor diversification

The 3 months correlation between Les and Centrale is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Les Htels de and Centrale dAchat Franaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrale dAchat Franaise and Les Htels 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 Les Htels de are associated (or correlated) with Centrale DAchat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrale dAchat Franaise has no effect on the direction of Les Htels i.e., Les Htels and Centrale DAchat go up and down completely randomly.

Pair Corralation between Les Htels and Centrale DAchat

Assuming the 90 days trading horizon Les Htels de is expected to generate 4.58 times more return on investment than Centrale DAchat. However, Les Htels is 4.58 times more volatile than Centrale dAchat Franaise. It trades about 0.08 of its potential returns per unit of risk. Centrale dAchat Franaise is currently generating about 0.01 per unit of risk. If you would invest  121.00  in Les Htels de on December 5, 2024 and sell it today you would earn a total of  23.00  from holding Les Htels de or generate 19.01% return on investment over 90 days.

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

Les Htels de  vs.  Centrale dAchat Franaise

Les Htels de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Les Htels de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Les Htels sustained solid returns over the last few months and may actually be approaching a breakup point.

Centrale dAchat Franaise

Risk-Adjusted Performance

Weak

Over the last 90 days Centrale dAchat Franaise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centrale DAchat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Les Htels and Centrale DAchat

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

The idea behind Les Htels de and Centrale dAchat Franaise 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.