Correlation Between Guerbet S and Lectra SA

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

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

Diversification Opportunities for Guerbet S and Lectra SA

0.17

Correlation Coefficient

Guerbet S  Lectra SA

Average diversification

The 3 months correlation between Guerbet and Lectra is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Guerbet S A and Lectra SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lectra SA and Guerbet S 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 Guerbet S A 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 Guerbet S i.e., Guerbet S and Lectra SA go up and down completely randomly.

Pair Corralation between Guerbet S and Lectra SA

Assuming the 90 days trading horizon Guerbet S A is expected to generate 1.16 times more return on investment than Lectra SA. However, Guerbet S is 1.16 times more volatile than Lectra SA. It trades about 0.05 of its potential returns per unit of risk. Lectra SA is currently generating about -0.02 per unit of risk. If you would invest  1,656  in Guerbet S A on September 26, 2024 and sell it today you would earn a total of  939.00  from holding Guerbet S A or generate 56.7% return on investment over 90 days.

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

Guerbet S A  vs.  Lectra SA

Guerbet S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerbet S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lectra SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lectra SA 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.

Pair Trading with Guerbet S and Lectra SA

The main advantage of trading using opposite Guerbet S and Lectra SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guerbet S 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 Guerbet S A 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.