Correlation Between BII Railway and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both BII Railway and Veolia Environnement 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 BII Railway and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Veolia Environnement SA, you can compare the effects of market volatilities on BII Railway and Veolia Environnement 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 BII Railway with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Veolia Environnement.
Diversification Opportunities for BII Railway and Veolia Environnement
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BII and Veolia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and BII Railway 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 BII Railway Transportation are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of BII Railway i.e., BII Railway and Veolia Environnement go up and down completely randomly.
Pair Corralation between BII Railway and Veolia Environnement
Assuming the 90 days horizon BII Railway Transportation is expected to generate 1.7 times more return on investment than Veolia Environnement. However, BII Railway is 1.7 times more volatile than Veolia Environnement SA. It trades about 0.01 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.19 per unit of risk. If you would invest 2.65 in BII Railway Transportation on September 19, 2024 and sell it today you would earn a total of 0.00 from holding BII Railway Transportation or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Veolia Environnement SA
Performance |
| Timeline |
| BII Railway Transpor |
| Veolia Environnement |
BII Railway and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Veolia Environnement
The main advantage of trading using opposite BII Railway and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway vs. Norsk Hydro ASA | BII Railway vs. Reliance Steel Aluminum |
| Veolia Environnement vs. BII Railway Transportation | Veolia Environnement vs. British American Tobacco | Veolia Environnement vs. Bumrungrad Hospital Public | Veolia Environnement vs. EVS Broadcast Equipment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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