Correlation Between Sword Group and Lectra SA

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

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

Diversification Opportunities for Sword Group and Lectra SA

0.49

Correlation Coefficient

Sword Group  Lectra SA

Very weak diversification

The 3 months correlation between Sword and Lectra is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sword Group SE and Lectra SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lectra SA and Sword Group 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 Sword Group SE are associated (or correlated) with Lectra SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lectra SA has no effect on the direction of Sword Group i.e., Sword Group and Lectra SA go up and down completely randomly.

Pair Corralation between Sword Group and Lectra SA

Assuming the 90 days trading horizon Sword Group SE is expected to generate 0.73 times more return on investment than Lectra SA. However, Sword Group SE is 1.37 times less risky than Lectra SA. It trades about 0.19 of its potential returns per unit of risk. Lectra SA is currently generating about 0.07 per unit of risk. If you would invest  3,112  in Sword Group SE on April 25, 2025 and sell it today you would earn a total of  618.00  from holding Sword Group SE or generate 19.86% return on investment over 90 days.

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

Sword Group SE  vs.  Lectra SA

Sword Group SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sword Group SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sword Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Lectra SA

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lectra SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lectra SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sword Group and Lectra SA

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

The idea behind Sword Group SE and Lectra 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .