Correlation Between LVMH Mot and Medincell

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

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

Diversification Opportunities for LVMH Mot and Medincell

-0.57

Correlation Coefficient

LVMH Mot  Medincell

Excellent diversification

The 3 months correlation between LVMH and Medincell is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA and LVMH Mot 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 LVMH Mot Hennessy are associated (or correlated) with Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of LVMH Mot i.e., LVMH Mot and Medincell go up and down completely randomly.

Pair Corralation between LVMH Mot and Medincell

Assuming the 90 days horizon LVMH Mot Hennessy is expected to generate 0.87 times more return on investment than Medincell. However, LVMH Mot Hennessy is 1.15 times less risky than Medincell. It trades about 0.06 of its potential returns per unit of risk. Medincell SA is currently generating about -0.02 per unit of risk. If you would invest  60,117  in LVMH Mot Hennessy on September 12, 2024 and sell it today you would earn a total of  4,263  from holding LVMH Mot Hennessy or generate 7.09% return on investment over 90 days.

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

LVMH Mot Hennessy  vs.  Medincell SA

LVMH Mot Hennessy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LVMH Mot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medincell SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medincell is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LVMH Mot and Medincell

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

The idea behind LVMH Mot Hennessy and Medincell 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.