Correlation Between Aeroports and Bureau Veritas
Can any of the company-specific risk be diversified away by investing in both Aeroports and Bureau Veritas 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 Aeroports and Bureau Veritas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeroports de Paris and Bureau Veritas SA, you can compare the effects of market volatilities on Aeroports and Bureau Veritas 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 Aeroports with a short position of Bureau Veritas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeroports and Bureau Veritas.
Diversification Opportunities for Aeroports and Bureau Veritas
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aeroports and Bureau is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aeroports de Paris and Bureau Veritas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bureau Veritas SA and Aeroports 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 Aeroports de Paris are associated (or correlated) with Bureau Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bureau Veritas SA has no effect on the direction of Aeroports i.e., Aeroports and Bureau Veritas go up and down completely randomly.
Pair Corralation between Aeroports and Bureau Veritas
Assuming the 90 days trading horizon Aeroports de Paris is expected to generate 1.11 times more return on investment than Bureau Veritas. However, Aeroports is 1.11 times more volatile than Bureau Veritas SA. It trades about -0.08 of its potential returns per unit of risk. Bureau Veritas SA is currently generating about -0.1 per unit of risk. If you would invest 11,150 in Aeroports de Paris on August 28, 2024 and sell it today you would lose (280.00) from holding Aeroports de Paris or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeroports de Paris vs. Bureau Veritas SA
Performance |
| Timeline |
| Aeroports de Paris |
| Bureau Veritas SA |
Aeroports and Bureau Veritas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeroports and Bureau Veritas
The main advantage of trading using opposite Aeroports and Bureau Veritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeroports position performs unexpectedly, Bureau Veritas 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 Bureau Veritas will offset losses from the drop in Bureau Veritas' long position.The idea behind Aeroports de Paris and Bureau Veritas 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.| Bureau Veritas vs. Prodways Group SA | Bureau Veritas vs. Claranova SE | Bureau Veritas vs. DBV Technologies SA | Bureau Veritas vs. Manitou BF SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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