Correlation Between REGAL ASIAN and LVMH Mot

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

By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and LVMH Mot Hennessy, you can compare the effects of market volatilities on REGAL ASIAN and LVMH Mot 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 REGAL ASIAN with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and LVMH Mot.

Diversification Opportunities for REGAL ASIAN and LVMH Mot

-0.27

Correlation Coefficient

REGAL ASIAN  LVMH Mot

Very good diversification

The 3 months correlation between REGAL and LVMH is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS 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 REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with LVMH Mot. 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 REGAL ASIAN i.e., REGAL ASIAN and LVMH Mot go up and down completely randomly.

Pair Corralation between REGAL ASIAN and LVMH Mot

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to generate 0.91 times more return on investment than LVMH Mot. However, REGAL ASIAN INVESTMENTS is 1.1 times less risky than LVMH Mot. It trades about 0.0 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.0 per unit of risk. If you would invest  119.00  in REGAL ASIAN INVESTMENTS on September 24, 2024 and sell it today you would lose (4.00) from holding REGAL ASIAN INVESTMENTS or give up 3.36% of portfolio value over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  LVMH Mot Hennessy

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, REGAL ASIAN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

LVMH Mot Hennessy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, LVMH Mot is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with REGAL ASIAN and LVMH Mot

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

The idea behind REGAL ASIAN INVESTMENTS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.