Correlation Between Lhyfe SA and Burelle SA

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

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

Diversification Opportunities for Lhyfe SA and Burelle SA

0.45

Correlation Coefficient

Lhyfe SA  Burelle SA

Very weak diversification

The 3 months correlation between Lhyfe and Burelle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lhyfe SA and Burelle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burelle SA and Lhyfe SA 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 Lhyfe SA are associated (or correlated) with Burelle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burelle SA has no effect on the direction of Lhyfe SA i.e., Lhyfe SA and Burelle SA go up and down completely randomly.

Pair Corralation between Lhyfe SA and Burelle SA

Assuming the 90 days trading horizon Lhyfe SA is expected to under-perform the Burelle SA. In addition to that, Lhyfe SA is 1.09 times more volatile than Burelle SA. It trades about -0.16 of its total potential returns per unit of risk. Burelle SA is currently generating about -0.07 per unit of volatility. If you would invest  35,500  in Burelle SA on September 3, 2024 and sell it today you would lose (3,500) from holding Burelle SA or give up 9.86% of portfolio value over 90 days.

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

Lhyfe SA  vs.  Burelle SA

Lhyfe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lhyfe SA 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.

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burelle 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 Lhyfe SA and Burelle SA

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

The idea behind Lhyfe SA and Burelle 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.