Correlation Between Les Hotels and Boiron SA
Can any of the company-specific risk be diversified away by investing in both Les Hotels and Boiron 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 Les Hotels and Boiron SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Hotels Bav and Boiron SA, you can compare the effects of market volatilities on Les Hotels and Boiron 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 Les Hotels with a short position of Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Boiron SA.
Diversification Opportunities for Les Hotels and Boiron SA
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Les and Boiron is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and Les Hotels 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 Les Hotels Bav are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of Les Hotels i.e., Les Hotels and Boiron SA go up and down completely randomly.
Pair Corralation between Les Hotels and Boiron SA
Assuming the 90 days trading horizon Les Hotels Bav is expected to under-perform the Boiron SA. But the stock apears to be less risky and, when comparing its historical volatility, Les Hotels Bav is 1.85 times less risky than Boiron SA. The stock trades about -0.16 of its potential returns per unit of risk. The Boiron SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,670 in Boiron SA on October 9, 2024 and sell it today you would earn a total of 15.00 from holding Boiron SA or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Hotels Bav vs. Boiron SA
Performance |
| Timeline |
| Les Hotels Bav |
| Boiron SA |
Les Hotels and Boiron SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and Boiron SA
The main advantage of trading using opposite Les Hotels and Boiron SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, Boiron 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 Boiron SA will offset losses from the drop in Boiron SA's long position.| Les Hotels vs. Les Htels de | Les Hotels vs. Moulinvest | Les Hotels vs. Bernard Loisea | Les Hotels vs. Groupimo SA |
| Boiron SA vs. Virbac SA | Boiron SA vs. Bonduelle SCA | Boiron SA vs. Biomerieux SA | Boiron SA vs. Guerbet S A |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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