Correlation Between Les Htels and Body One

Can any of the company-specific risk be diversified away by investing in both Les Htels and Body One 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 Body One 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 Body One SA, you can compare the effects of market volatilities on Les Htels and Body One 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 Body One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Htels and Body One.

Diversification Opportunities for Les Htels and Body One

-0.09

Correlation Coefficient

Les Htels  Body One

Good diversification

The 3 months correlation between Les and Body is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Les Htels de and Body One SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body One SA 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 Body One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body One SA has no effect on the direction of Les Htels i.e., Les Htels and Body One go up and down completely randomly.

Pair Corralation between Les Htels and Body One

Assuming the 90 days trading horizon Les Htels de is expected to under-perform the Body One. In addition to that, Les Htels is 1.47 times more volatile than Body One SA. It trades about -0.07 of its total potential returns per unit of risk. Body One SA is currently generating about 0.05 per unit of volatility. If you would invest  30.00  in Body One SA on September 17, 2024 and sell it today you would earn a total of  2.00  from holding Body One SA or generate 6.67% return on investment over 90 days.

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

Les Htels de  vs.  Body One SA

Les Htels de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Les Htels de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Body One SA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Body One SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Body One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Les Htels and Body One

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

The idea behind Les Htels de and Body One 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.