Correlation Between Schneider Electric and Lacroix Group

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

By analyzing existing cross correlation between Schneider Electric SE and Lacroix Group SA, you can compare the effects of market volatilities on Schneider Electric and Lacroix Group 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 Schneider Electric with a short position of Lacroix Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Lacroix Group.

Diversification Opportunities for Schneider Electric and Lacroix Group

-0.24

Correlation Coefficient

Schneider Electric  Lacroix Group

Very good diversification

The 3 months correlation between Schneider and Lacroix is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Lacroix Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lacroix Group SA and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Lacroix Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lacroix Group SA has no effect on the direction of Schneider Electric i.e., Schneider Electric and Lacroix Group go up and down completely randomly.

Pair Corralation between Schneider Electric and Lacroix Group

Assuming the 90 days horizon Schneider Electric SE is expected to under-perform the Lacroix Group. But the stock apears to be less risky and, when comparing its historical volatility, Schneider Electric SE is 1.2 times less risky than Lacroix Group. The stock trades about -0.04 of its potential returns per unit of risk. The Lacroix Group SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Lacroix Group SA on December 29, 2024 and sell it today you would lose (70.00) from holding Lacroix Group SA or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Schneider Electric SE  vs.  Lacroix Group SA

Schneider Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schneider Electric SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lacroix Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lacroix Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lacroix Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schneider Electric and Lacroix Group

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

The idea behind Schneider Electric SE and Lacroix Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.