Correlation Between Seche Environnement and BP PLC
Can any of the company-specific risk be diversified away by investing in both Seche Environnement and BP PLC 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 Seche Environnement and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seche Environnement SA and BP PLC ADR, you can compare the effects of market volatilities on Seche Environnement and BP PLC 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 Seche Environnement with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seche Environnement and BP PLC.
Diversification Opportunities for Seche Environnement and BP PLC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seche and 0HKP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Seche Environnement 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 Seche Environnement SA are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Seche Environnement i.e., Seche Environnement and BP PLC go up and down completely randomly.
Pair Corralation between Seche Environnement and BP PLC
Assuming the 90 days trading horizon Seche Environnement SA is expected to under-perform the BP PLC. In addition to that, Seche Environnement is 1.42 times more volatile than BP PLC ADR. It trades about -0.04 of its total potential returns per unit of risk. BP PLC ADR is currently generating about -0.04 per unit of volatility. If you would invest 3,337 in BP PLC ADR on September 3, 2024 and sell it today you would lose (445.00) from holding BP PLC ADR or give up 13.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.01% |
| Values | Daily Returns |
Seche Environnement SA vs. BP PLC ADR
Performance |
| Timeline |
| Seche Environnement |
| BP PLC ADR |
Seche Environnement and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seche Environnement and BP PLC
The main advantage of trading using opposite Seche Environnement and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seche Environnement position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Seche Environnement vs. STMicroelectronics NV | Seche Environnement vs. Air Products Chemicals | Seche Environnement vs. Federal Realty Investment | Seche Environnement vs. X FAB Silicon Foundries |
| BP PLC vs. Synchrony Financial | BP PLC vs. Target Healthcare REIT | BP PLC vs. Regions Financial Corp | BP PLC vs. Litigation Capital Management |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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