Correlation Between Lhyfe SA and Broadpeak

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

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

Diversification Opportunities for Lhyfe SA and Broadpeak

0.53

Correlation Coefficient

Lhyfe SA  Broadpeak

Very weak diversification

The 3 months correlation between Lhyfe and Broadpeak is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lhyfe SA and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and Lhyfe SA 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 Lhyfe SA are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Lhyfe SA i.e., Lhyfe SA and Broadpeak go up and down completely randomly.

Pair Corralation between Lhyfe SA and Broadpeak

Assuming the 90 days trading horizon Lhyfe SA is expected to generate 1.47 times less return on investment than Broadpeak. In addition to that, Lhyfe SA is 1.14 times more volatile than Broadpeak SA. It trades about 0.08 of its total potential returns per unit of risk. Broadpeak SA is currently generating about 0.13 per unit of volatility. If you would invest  100.00  in Broadpeak SA on December 1, 2024 and sell it today you would earn a total of  26.00  from holding Broadpeak SA or generate 26.0% return on investment over 90 days.

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

Lhyfe SA  vs.  Broadpeak SA

Lhyfe SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lhyfe SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Lhyfe SA reported solid returns over the last few months and may actually be approaching a breakup point.

Broadpeak SA

Risk-Adjusted Performance

OK

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

Pair Trading with Lhyfe SA and Broadpeak

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

The idea behind Lhyfe SA and Broadpeak 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.