Correlation Between Socit BIC and Compagnie
Can any of the company-specific risk be diversified away by investing in both Socit BIC and Compagnie 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 Socit BIC and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Socit BIC SA and Compagnie de Saint Gobain, you can compare the effects of market volatilities on Socit BIC and Compagnie 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 Socit BIC with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Socit BIC and Compagnie.
Diversification Opportunities for Socit BIC and Compagnie
Very weak diversification
The 3 months correlation between Socit and Compagnie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and Socit BIC 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 Socit BIC SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Socit BIC i.e., Socit BIC and Compagnie go up and down completely randomly.
Pair Corralation between Socit BIC and Compagnie
Assuming the 90 days horizon Socit BIC is expected to generate 4.44 times less return on investment than Compagnie. In addition to that, Socit BIC is 1.1 times more volatile than Compagnie de Saint Gobain. It trades about 0.03 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.12 per unit of volatility. If you would invest 5,697 in Compagnie de Saint Gobain on August 24, 2024 and sell it today you would earn a total of 3,093 from holding Compagnie de Saint Gobain or generate 54.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Socit BIC SA vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Socit BIC SA |
| Compagnie de Saint |
Socit BIC and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Socit BIC and Compagnie
The main advantage of trading using opposite Socit BIC and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Socit BIC position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Socit BIC vs. Imerys SA | Socit BIC vs. Casino Guichard Perrachon | Socit BIC vs. SEB SA | Socit BIC vs. Mtropole Tlvision SA |
| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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