Correlation Between Bains Mer and Air France
Can any of the company-specific risk be diversified away by investing in both Bains Mer and Air France 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 Bains Mer and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bains Mer Monaco and Air France KLM SA, you can compare the effects of market volatilities on Bains Mer and Air France 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 Bains Mer with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bains Mer and Air France.
Diversification Opportunities for Bains Mer and Air France
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bains and Air is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bains Mer Monaco and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and Bains Mer 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 Bains Mer Monaco are associated (or correlated) with Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of Bains Mer i.e., Bains Mer and Air France go up and down completely randomly.
Pair Corralation between Bains Mer and Air France
Assuming the 90 days trading horizon Bains Mer Monaco is expected to under-perform the Air France. But the stock apears to be less risky and, when comparing its historical volatility, Bains Mer Monaco is 1.59 times less risky than Air France. The stock trades about -0.05 of its potential returns per unit of risk. The Air France KLM SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 761.00 in Air France KLM SA on September 19, 2024 and sell it today you would earn a total of 82.00 from holding Air France KLM SA or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bains Mer Monaco vs. Air France KLM SA
Performance |
| Timeline |
| Bains Mer Monaco |
| Air France KLM |
Bains Mer and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bains Mer and Air France
The main advantage of trading using opposite Bains Mer and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bains Mer position performs unexpectedly, Air France 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 Air France will offset losses from the drop in Air France's long position.| Bains Mer vs. SA Catana Group | Bains Mer vs. Verallia | Bains Mer vs. Thermador Groupe SA | Bains Mer vs. Maisons du Monde |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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