Correlation Between Eramet SA and Socit BIC
Can any of the company-specific risk be diversified away by investing in both Eramet SA and Socit BIC 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 Eramet SA and Socit BIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eramet SA and Socit BIC SA, you can compare the effects of market volatilities on Eramet SA and Socit BIC 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 Eramet SA with a short position of Socit BIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eramet SA and Socit BIC.
Diversification Opportunities for Eramet SA and Socit BIC
Excellent diversification
The 3 months correlation between Eramet and Socit is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA and Socit BIC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit BIC SA and Eramet 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 Eramet SA are associated (or correlated) with Socit BIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit BIC SA has no effect on the direction of Eramet SA i.e., Eramet SA and Socit BIC go up and down completely randomly.
Pair Corralation between Eramet SA and Socit BIC
Assuming the 90 days trading horizon Eramet SA is expected to generate 2.83 times more return on investment than Socit BIC. However, Eramet SA is 2.83 times more volatile than Socit BIC SA. It trades about -0.05 of its potential returns per unit of risk. Socit BIC SA is currently generating about -0.54 per unit of risk. If you would invest 5,380 in Eramet SA on August 28, 2024 and sell it today you would lose (150.00) from holding Eramet SA or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eramet SA vs. Socit BIC SA
Performance |
| Timeline |
| Eramet SA |
| Socit BIC SA |
Eramet SA and Socit BIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eramet SA and Socit BIC
The main advantage of trading using opposite Eramet SA and Socit BIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eramet SA position performs unexpectedly, Socit BIC 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 Socit BIC will offset losses from the drop in Socit BIC's long position.The idea behind Eramet SA and Socit BIC SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Socit BIC vs. Imerys SA | Socit BIC vs. Casino Guichard Perrachon | Socit BIC vs. SEB SA | Socit BIC vs. Mtropole Tlvision 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |