Correlation Between LOreal SA and Groupe OKwind

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

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

Diversification Opportunities for LOreal SA and Groupe OKwind

-0.56

Correlation Coefficient

LOreal SA  Groupe OKwind

Excellent diversification

The 3 months correlation between LOreal and Groupe is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Groupe OKwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe OKwind and LOreal SA 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 LOreal SA are associated (or correlated) with Groupe OKwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe OKwind has no effect on the direction of LOreal SA i.e., LOreal SA and Groupe OKwind go up and down completely randomly.

Pair Corralation between LOreal SA and Groupe OKwind

Assuming the 90 days horizon LOreal SA is expected to under-perform the Groupe OKwind. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 3.68 times less risky than Groupe OKwind. The stock trades about -0.01 of its potential returns per unit of risk. The Groupe OKwind is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Groupe OKwind on April 24, 2025 and sell it today you would earn a total of  4.00  from holding Groupe OKwind or generate 2.01% return on investment over 90 days.

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

LOreal SA  vs.  Groupe OKwind

LOreal SA

Risk-Adjusted Performance

Very Weak

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

Groupe OKwind

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe OKwind are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupe OKwind may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with LOreal SA and Groupe OKwind

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

The idea behind LOreal SA and Groupe OKwind 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.