Correlation Between Leslies and Ceconomy

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

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

Diversification Opportunities for Leslies and Ceconomy

0.37

Correlation Coefficient

Leslies  Ceconomy

Weak diversification

The 3 months correlation between Leslies and Ceconomy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Leslies and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR and Leslies 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 Leslies are associated (or correlated) with Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Leslies i.e., Leslies and Ceconomy go up and down completely randomly.

Pair Corralation between Leslies and Ceconomy

Given the investment horizon of 90 days Leslies is expected to generate 0.75 times more return on investment than Ceconomy. However, Leslies is 1.34 times less risky than Ceconomy. It trades about -0.04 of its potential returns per unit of risk. Ceconomy AG ADR is currently generating about -0.14 per unit of risk. If you would invest  240.00  in Leslies on October 5, 2024 and sell it today you would lose (13.00) from holding Leslies or give up 5.42% of portfolio value over 90 days.

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

Leslies  vs.  Ceconomy AG ADR

Leslies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leslies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Ceconomy AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ceconomy AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Leslies and Ceconomy

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

The idea behind Leslies and Ceconomy AG ADR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.