Correlation Between LVMH Mot and Colas SA

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

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

Diversification Opportunities for LVMH Mot and Colas SA

0.63

Correlation Coefficient

LVMH Mot  Colas SA

Poor diversification

The 3 months correlation between LVMH and Colas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Colas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colas SA and LVMH Mot 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 LVMH Mot Hennessy are associated (or correlated) with Colas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colas SA has no effect on the direction of LVMH Mot i.e., LVMH Mot and Colas SA go up and down completely randomly.

Pair Corralation between LVMH Mot and Colas SA

If you would invest  35,128  in Colas SA on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Colas SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

LVMH Mot Hennessy  vs.  Colas SA

LVMH Mot Hennessy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LVMH Mot Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LVMH Mot is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Colas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Colas SA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LVMH Mot and Colas SA

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

The idea behind LVMH Mot Hennessy and Colas 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.