Correlation Between Bonduelle SCA and Innelec Multimedia
Can any of the company-specific risk be diversified away by investing in both Bonduelle SCA and Innelec Multimedia 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 Bonduelle SCA and Innelec Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bonduelle SCA and Innelec Multimedia, you can compare the effects of market volatilities on Bonduelle SCA and Innelec Multimedia 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 Bonduelle SCA with a short position of Innelec Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonduelle SCA and Innelec Multimedia.
Diversification Opportunities for Bonduelle SCA and Innelec Multimedia
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bonduelle and Innelec is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bonduelle SCA and Innelec Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innelec Multimedia and Bonduelle SCA 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 Bonduelle SCA are associated (or correlated) with Innelec Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innelec Multimedia has no effect on the direction of Bonduelle SCA i.e., Bonduelle SCA and Innelec Multimedia go up and down completely randomly.
Pair Corralation between Bonduelle SCA and Innelec Multimedia
Assuming the 90 days trading horizon Bonduelle SCA is expected to under-perform the Innelec Multimedia. But the stock apears to be less risky and, when comparing its historical volatility, Bonduelle SCA is 1.9 times less risky than Innelec Multimedia. The stock trades about -0.06 of its potential returns per unit of risk. The Innelec Multimedia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Innelec Multimedia on August 26, 2024 and sell it today you would lose (216.00) from holding Innelec Multimedia or give up 41.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bonduelle SCA vs. Innelec Multimedia
Performance |
| Timeline |
| Bonduelle SCA |
| Innelec Multimedia |
Bonduelle SCA and Innelec Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bonduelle SCA and Innelec Multimedia
The main advantage of trading using opposite Bonduelle SCA and Innelec Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonduelle SCA position performs unexpectedly, Innelec Multimedia 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 Innelec Multimedia will offset losses from the drop in Innelec Multimedia's long position.| Bonduelle SCA vs. LOreal SA | Bonduelle SCA vs. Sanofi SA | Bonduelle SCA vs. Air Liquide SA | Bonduelle SCA vs. AXA SA |
| Innelec Multimedia vs. Stef SA | Innelec Multimedia vs. Bonduelle SCA | Innelec Multimedia vs. Lisi SA | Innelec Multimedia vs. Interparfums 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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