Correlation Between Lion Biotechnologies and LVMH Moët

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Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and LVMH Moët 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 Lion Biotechnologies and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and LVMH Mot Hennessy, you can compare the effects of market volatilities on Lion Biotechnologies and LVMH Moët 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 Lion Biotechnologies with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and LVMH Moët.

Diversification Opportunities for Lion Biotechnologies and LVMH Moët

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Lion and LVMH is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and LVMH Moët go up and down completely randomly.

Pair Corralation between Lion Biotechnologies and LVMH Moët

Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the LVMH Moët. In addition to that, Lion Biotechnologies is 1.44 times more volatile than LVMH Mot Hennessy. It trades about -0.07 of its total potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.05 per unit of volatility. If you would invest  11,582  in LVMH Mot Hennessy on September 23, 2024 and sell it today you would earn a total of  818.00  from holding LVMH Mot Hennessy or generate 7.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lion Biotechnologies  vs.  LVMH Mot Hennessy

 Performance 
       Timeline  
Lion Biotechnologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lion Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
LVMH Mot Hennessy 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, LVMH Moët may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lion Biotechnologies and LVMH Moët Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lion Biotechnologies and LVMH Moët

The main advantage of trading using opposite Lion Biotechnologies and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, LVMH Moët 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 LVMH Moët will offset losses from the drop in LVMH Moët's long position.
The idea behind Lion Biotechnologies and LVMH Mot Hennessy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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