Correlation Between Interparfums and Lisi SA
Can any of the company-specific risk be diversified away by investing in both Interparfums and Lisi 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 Interparfums and Lisi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interparfums SA and Lisi SA, you can compare the effects of market volatilities on Interparfums and Lisi 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 Interparfums with a short position of Lisi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interparfums and Lisi SA.
Diversification Opportunities for Interparfums and Lisi SA
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Interparfums and Lisi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Interparfums SA and Lisi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisi SA and Interparfums 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 Interparfums SA are associated (or correlated) with Lisi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisi SA has no effect on the direction of Interparfums i.e., Interparfums and Lisi SA go up and down completely randomly.
Pair Corralation between Interparfums and Lisi SA
Assuming the 90 days trading horizon Interparfums SA is expected to generate 1.21 times more return on investment than Lisi SA. However, Interparfums is 1.21 times more volatile than Lisi SA. It trades about -0.12 of its potential returns per unit of risk. Lisi SA is currently generating about -0.26 per unit of risk. If you would invest 4,530 in Interparfums SA on September 26, 2024 and sell it today you would lose (570.00) from holding Interparfums SA or give up 12.58% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.46% |
Values | Daily Returns |
Interparfums SA vs. Lisi SA
Performance |
Timeline |
Interparfums SA |
Lisi SA |
Interparfums and Lisi SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Interparfums and Lisi SA
The main advantage of trading using opposite Interparfums and Lisi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interparfums position performs unexpectedly, Lisi 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 Lisi SA will offset losses from the drop in Lisi SA's long position.Interparfums vs. LVMH Mot Hennessy | Interparfums vs. Danone SA | Interparfums vs. Air Liquide SA | Interparfums vs. Hermes International SCA |
Check out your portfolio center.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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