Correlation Between Bains Mer and Lucibel

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

By analyzing existing cross correlation between Bains Mer Monaco and Lucibel, you can compare the effects of market volatilities on Bains Mer and Lucibel 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 Bains Mer with a short position of Lucibel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bains Mer and Lucibel.

Diversification Opportunities for Bains Mer and Lucibel

0.74

Correlation Coefficient

Bains Mer  Lucibel

Poor diversification

The 3 months correlation between Bains and Lucibel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bains Mer Monaco and Lucibel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucibel and Bains Mer 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 Bains Mer Monaco are associated (or correlated) with Lucibel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucibel has no effect on the direction of Bains Mer i.e., Bains Mer and Lucibel go up and down completely randomly.

Pair Corralation between Bains Mer and Lucibel

Assuming the 90 days trading horizon Bains Mer Monaco is expected to under-perform the Lucibel. But the stock apears to be less risky and, when comparing its historical volatility, Bains Mer Monaco is 5.4 times less risky than Lucibel. The stock trades about -0.13 of its potential returns per unit of risk. The Lucibel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Lucibel on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Lucibel or generate 0.0% return on investment over 90 days.

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

Bains Mer Monaco  vs.  Lucibel

Bains Mer Monaco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bains Mer Monaco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lucibel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucibel has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bains Mer and Lucibel

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

The idea behind Bains Mer Monaco and Lucibel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.