Correlation Between LOreal SA and Oeneo SA
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Oeneo 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 LOreal SA and Oeneo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Oeneo SA, you can compare the effects of market volatilities on LOreal SA and Oeneo 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 LOreal SA with a short position of Oeneo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Oeneo SA.
Diversification Opportunities for LOreal SA and Oeneo SA
Modest diversification
The 3 months correlation between LOreal and Oeneo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Oeneo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oeneo SA 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 Oeneo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oeneo SA has no effect on the direction of LOreal SA i.e., LOreal SA and Oeneo SA go up and down completely randomly.
Pair Corralation between LOreal SA and Oeneo SA
Assuming the 90 days horizon LOreal SA is expected to generate 1.07 times more return on investment than Oeneo SA. However, LOreal SA is 1.07 times more volatile than Oeneo SA. It trades about 0.1 of its potential returns per unit of risk. Oeneo SA is currently generating about -0.13 per unit of risk. If you would invest 42,442 in LOreal SA on January 31, 2024 and sell it today you would earn a total of 1,208 from holding LOreal SA or generate 2.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LOreal SA vs. Oeneo SA
Performance |
Timeline |
LOreal SA |
Oeneo SA |
LOreal SA and Oeneo SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LOreal SA and Oeneo SA
The main advantage of trading using opposite LOreal SA and Oeneo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Oeneo 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 Oeneo SA will offset losses from the drop in Oeneo SA's long position.LOreal SA vs. LVMH Mot Hennessy | LOreal SA vs. Danone SA | LOreal SA vs. Air Liquide SA | LOreal SA vs. Hermes International SCA |
Oeneo SA vs. LOreal SA | Oeneo SA vs. Danone SA | Oeneo SA vs. Compagnie Generale des | Oeneo SA vs. Air Liquide SA |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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