Correlation Between Stephan and LOral SA

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

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

Diversification Opportunities for Stephan and LOral SA

-0.62

Correlation Coefficient

Stephan  LOral SA

Excellent diversification

The 3 months correlation between Stephan and LOral is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Stephan Co and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA and Stephan 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 The Stephan Co are associated (or correlated) with LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Stephan i.e., Stephan and LOral SA go up and down completely randomly.

Pair Corralation between Stephan and LOral SA

If you would invest  34,844  in LOral SA on September 17, 2024 and sell it today you would earn a total of  1,186  from holding LOral SA or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

The Stephan Co  vs.  LOral SA

The Stephan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Stephan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Stephan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

LOral SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOral SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Stephan and LOral SA

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

The idea behind The Stephan Co and LOral 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.