Correlation Between Labo Print and Develia SA

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

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

Diversification Opportunities for Labo Print and Develia SA

0.34

Correlation Coefficient

Labo Print  Develia SA

Weak diversification

The 3 months correlation between Labo and Develia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Labo Print SA and Develia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Develia SA and Labo Print 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 Labo Print SA are associated (or correlated) with Develia SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Develia SA has no effect on the direction of Labo Print i.e., Labo Print and Develia SA go up and down completely randomly.

Pair Corralation between Labo Print and Develia SA

Assuming the 90 days trading horizon Labo Print SA is expected to generate 1.48 times more return on investment than Develia SA. However, Labo Print is 1.48 times more volatile than Develia SA. It trades about 0.13 of its potential returns per unit of risk. Develia SA is currently generating about 0.14 per unit of risk. If you would invest  1,270  in Labo Print SA on December 30, 2024 and sell it today you would earn a total of  270.00  from holding Labo Print SA or generate 21.26% return on investment over 90 days.

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

Labo Print SA  vs.  Develia SA

Labo Print SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Labo Print SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Labo Print reported solid returns over the last few months and may actually be approaching a breakup point.

Develia SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Develia SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Develia SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Labo Print and Develia SA

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

The idea behind Labo Print SA and Develia 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 CEOs Directory module to screen CEOs from public companies around the world.