Correlation Between Compagnie and Groupe LDLC

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

By analyzing existing cross correlation between Compagnie du Cambodge and Groupe LDLC SA, you can compare the effects of market volatilities on Compagnie and Groupe LDLC 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 Compagnie with a short position of Groupe LDLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Groupe LDLC.

Diversification Opportunities for Compagnie and Groupe LDLC

-0.54

Correlation Coefficient

Compagnie  Groupe LDLC

Excellent diversification

The 3 months correlation between Compagnie and Groupe is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Groupe LDLC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe LDLC SA and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Groupe LDLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe LDLC SA has no effect on the direction of Compagnie i.e., Compagnie and Groupe LDLC go up and down completely randomly.

Pair Corralation between Compagnie and Groupe LDLC

Assuming the 90 days trading horizon Compagnie du Cambodge is expected to under-perform the Groupe LDLC. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie du Cambodge is 1.21 times less risky than Groupe LDLC. The stock trades about -0.06 of its potential returns per unit of risk. The Groupe LDLC SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  674.00  in Groupe LDLC SA on April 22, 2025 and sell it today you would earn a total of  82.00  from holding Groupe LDLC SA or generate 12.17% return on investment over 90 days.

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

Compagnie du Cambodge  vs.  Groupe LDLC SA

Compagnie du Cambodge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie du Cambodge 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.

Groupe LDLC SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe LDLC SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupe LDLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie and Groupe LDLC

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

The idea behind Compagnie du Cambodge and Groupe LDLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.