Correlation Between Boiron SA and LNA Sante
Can any of the company-specific risk be diversified away by investing in both Boiron SA and LNA Sante 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 Boiron SA and LNA Sante into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boiron SA and LNA Sante SA, you can compare the effects of market volatilities on Boiron SA and LNA Sante 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 Boiron SA with a short position of LNA Sante. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boiron SA and LNA Sante.
Diversification Opportunities for Boiron SA and LNA Sante
Poor diversification
The 3 months correlation between Boiron and LNA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and LNA Sante SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LNA Sante SA and Boiron SA 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 Boiron SA are associated (or correlated) with LNA Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LNA Sante SA has no effect on the direction of Boiron SA i.e., Boiron SA and LNA Sante go up and down completely randomly.
Pair Corralation between Boiron SA and LNA Sante
Assuming the 90 days trading horizon Boiron SA is expected to generate 1.55 times more return on investment than LNA Sante. However, Boiron SA is 1.55 times more volatile than LNA Sante SA. It trades about -0.02 of its potential returns per unit of risk. LNA Sante SA is currently generating about -0.24 per unit of risk. If you would invest 2,685 in Boiron SA on November 5, 2024 and sell it today you would lose (40.00) from holding Boiron SA or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boiron SA vs. LNA Sante SA
Performance |
| Timeline |
| Boiron SA |
| LNA Sante SA |
Boiron SA and LNA Sante Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boiron SA and LNA Sante
The main advantage of trading using opposite Boiron SA and LNA Sante positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boiron SA position performs unexpectedly, LNA Sante 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 LNA Sante will offset losses from the drop in LNA Sante's long position.| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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