Correlation Between Ceconomy and Leslies

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

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

Diversification Opportunities for Ceconomy and Leslies

0.37

Correlation Coefficient

Ceconomy  Leslies

Weak diversification

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

Pair Corralation between Ceconomy and Leslies

Assuming the 90 days horizon Ceconomy AG ADR is expected to under-perform the Leslies. In addition to that, Ceconomy is 1.34 times more volatile than Leslies. It trades about -0.14 of its total potential returns per unit of risk. Leslies is currently generating about -0.04 per unit of volatility. 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

Ceconomy AG ADR  vs.  Leslies

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.

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.

Pair Trading with Ceconomy and Leslies

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

The idea behind Ceconomy AG ADR and Leslies 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 Transaction History module to view history of all your transactions and understand their impact on performance.