Correlation Between Hermes International and LVMH Mot

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Hermes International and LVMH Mot 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 Hermes International and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SA and LVMH Mot Hennessy, you can compare the effects of market volatilities on Hermes International and LVMH Mot 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 Hermes International with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and LVMH Mot.

Diversification Opportunities for Hermes International and LVMH Mot

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Hermes and LVMH is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SA and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy and Hermes International 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 Hermes International SA are associated (or correlated) with LVMH Mot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Hermes International i.e., Hermes International and LVMH Mot go up and down completely randomly.

Pair Corralation between Hermes International and LVMH Mot

Assuming the 90 days horizon Hermes International SA is expected to generate 0.93 times more return on investment than LVMH Mot. However, Hermes International SA is 1.08 times less risky than LVMH Mot. It trades about 0.14 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.07 per unit of risk. If you would invest  24,981  in Hermes International SA on December 29, 2023 and sell it today you would earn a total of  994.00  from holding Hermes International SA or generate 3.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Hermes International SA  vs.  LVMH Mot Hennessy

 Performance 
       Timeline  
Hermes International 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Hermes International SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Hermes International showed solid returns over the last few months and may actually be approaching a breakup point.
LVMH Mot Hennessy 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, LVMH Mot may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Hermes International and LVMH Mot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hermes International and LVMH Mot

The main advantage of trading using opposite Hermes International and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, LVMH Mot 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 LVMH Mot will offset losses from the drop in LVMH Mot's long position.
The idea behind Hermes International SA and LVMH Mot Hennessy 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Share Portfolio
Track or share privately all of your investments from the convenience of any device
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation