Correlation Between Edenred SA and Biomerieux
Can any of the company-specific risk be diversified away by investing in both Edenred SA and Biomerieux 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 Edenred SA and Biomerieux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edenred SA and Biomerieux SA, you can compare the effects of market volatilities on Edenred SA and Biomerieux 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 Edenred SA with a short position of Biomerieux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edenred SA and Biomerieux.
Diversification Opportunities for Edenred SA and Biomerieux
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edenred and Biomerieux is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Edenred SA and Biomerieux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerieux SA and Edenred 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 Edenred SA are associated (or correlated) with Biomerieux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerieux SA has no effect on the direction of Edenred SA i.e., Edenred SA and Biomerieux go up and down completely randomly.
Pair Corralation between Edenred SA and Biomerieux
Assuming the 90 days trading horizon Edenred SA is expected to generate 1.61 times less return on investment than Biomerieux. But when comparing it to its historical volatility, Edenred SA is 1.01 times less risky than Biomerieux. It trades about 0.22 of its potential returns per unit of risk. Biomerieux SA is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 10,590 in Biomerieux SA on November 5, 2024 and sell it today you would earn a total of 1,120 from holding Biomerieux SA or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edenred SA vs. Biomerieux SA
Performance |
| Timeline |
| Edenred SA |
| Biomerieux SA |
Edenred SA and Biomerieux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edenred SA and Biomerieux
The main advantage of trading using opposite Edenred SA and Biomerieux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edenred SA position performs unexpectedly, Biomerieux 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 Biomerieux will offset losses from the drop in Biomerieux's long position.| Edenred SA vs. Bureau Veritas SA | Edenred SA vs. Sodexo SA | Edenred SA vs. Legrand SA | Edenred SA vs. Accor S A |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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