Correlation Between Lanvin Group and Birks

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

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

Diversification Opportunities for Lanvin Group and Birks

0.55

Correlation Coefficient

Lanvin Group  Birks

Very weak diversification

The 3 months correlation between Lanvin and Birks is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lanvin Group Holdings and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group and Lanvin Group 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 Lanvin Group Holdings are associated (or correlated) with Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Lanvin Group i.e., Lanvin Group and Birks go up and down completely randomly.

Pair Corralation between Lanvin Group and Birks

Given the investment horizon of 90 days Lanvin Group Holdings is expected to generate 1.97 times more return on investment than Birks. However, Lanvin Group is 1.97 times more volatile than Birks Group. It trades about -0.01 of its potential returns per unit of risk. Birks Group is currently generating about -0.28 per unit of risk. If you would invest  181.00  in Lanvin Group Holdings on August 30, 2024 and sell it today you would lose (25.00) from holding Lanvin Group Holdings or give up 13.81% of portfolio value over 90 days.

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

Lanvin Group Holdings  vs.  Birks Group

Lanvin Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lanvin Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lanvin Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Birks Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birks Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Lanvin Group and Birks

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

The idea behind Lanvin Group Holdings and Birks Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.