Correlation Between Societe LDC and Bonduelle SCA

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

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

Diversification Opportunities for Societe LDC and Bonduelle SCA

0.15

Correlation Coefficient

Societe LDC  Bonduelle SCA

Average diversification

The 3 months correlation between Societe and Bonduelle is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Societe LDC SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA and Societe LDC 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 Societe LDC SA are associated (or correlated) with Bonduelle SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonduelle SCA has no effect on the direction of Societe LDC i.e., Societe LDC and Bonduelle SCA go up and down completely randomly.

Pair Corralation between Societe LDC and Bonduelle SCA

Assuming the 90 days trading horizon Societe LDC is expected to generate 4.06 times less return on investment than Bonduelle SCA. But when comparing it to its historical volatility, Societe LDC SA is 1.19 times less risky than Bonduelle SCA. It trades about 0.04 of its potential returns per unit of risk. Bonduelle SCA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  595.00  in Bonduelle SCA on December 2, 2024 and sell it today you would earn a total of  94.00  from holding Bonduelle SCA or generate 15.8% return on investment over 90 days.

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

Societe LDC SA  vs.  Bonduelle SCA

Societe LDC SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Societe LDC SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Societe LDC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bonduelle SCA

Risk-Adjusted Performance

Good

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

Pair Trading with Societe LDC and Bonduelle SCA

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

The idea behind Societe LDC SA and Bonduelle SCA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.