Correlation Between Bet-at-home and LVMH Mot

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

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

Diversification Opportunities for Bet-at-home and LVMH Mot

0.32

Correlation Coefficient

Bet-at-home  LVMH Mot

Weak diversification

The 3 months correlation between Bet-at-home and LVMH is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding bet at home AG 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 Bet-at-home 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 bet at home AG 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 Bet-at-home i.e., Bet-at-home and LVMH Mot go up and down completely randomly.

Pair Corralation between Bet-at-home and LVMH Mot

Assuming the 90 days trading horizon bet at home AG is expected to under-perform the LVMH Mot. But the stock apears to be less risky and, when comparing its historical volatility, bet at home AG is 1.03 times less risky than LVMH Mot. The stock trades about -0.05 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  58,760  in LVMH Mot Hennessy on September 24, 2024 and sell it today you would earn a total of  4,110  from holding LVMH Mot Hennessy or generate 6.99% return on investment over 90 days.

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

bet at home AG  vs.  LVMH Mot Hennessy

bet at home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days bet at home AG 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Bet-at-home and LVMH Mot

The main advantage of trading using opposite Bet-at-home and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bet-at-home 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 bet at home AG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.