Correlation Between Societe LDC and Malteries Franco

Can any of the company-specific risk be diversified away by investing in both Societe LDC and Malteries Franco 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 Malteries Franco 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 Malteries Franco Belges Socit, you can compare the effects of market volatilities on Societe LDC and Malteries Franco 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 Malteries Franco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe LDC and Malteries Franco.

Diversification Opportunities for Societe LDC and Malteries Franco

-0.17

Correlation Coefficient

Societe LDC  Malteries Franco

Good diversification

The 3 months correlation between Societe and Malteries is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Societe LDC SA and Malteries Franco Belges Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malteries Franco Belges 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 Malteries Franco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malteries Franco Belges has no effect on the direction of Societe LDC i.e., Societe LDC and Malteries Franco go up and down completely randomly.

Pair Corralation between Societe LDC and Malteries Franco

Assuming the 90 days trading horizon Societe LDC is expected to generate 3.85 times less return on investment than Malteries Franco. But when comparing it to its historical volatility, Societe LDC SA is 1.58 times less risky than Malteries Franco. It trades about 0.04 of its potential returns per unit of risk. Malteries Franco Belges Socit is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  77,656  in Malteries Franco Belges Socit on December 29, 2024 and sell it today you would earn a total of  8,344  from holding Malteries Franco Belges Socit or generate 10.74% return on investment over 90 days.

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

Societe LDC SA  vs.  Malteries Franco Belges Socit

Societe LDC SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Societe LDC SA are ranked lower than 2 (%) 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.

Malteries Franco Belges

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Malteries Franco Belges Socit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malteries Franco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Societe LDC and Malteries Franco

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

The idea behind Societe LDC SA and Malteries Franco Belges Socit 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.