Correlation Between Fleury SA and Biomm SA
Can any of the company-specific risk be diversified away by investing in both Fleury SA and Biomm SA 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 Fleury SA and Biomm SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fleury SA and Biomm SA, you can compare the effects of market volatilities on Fleury SA and Biomm SA 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 Fleury SA with a short position of Biomm SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fleury SA and Biomm SA.
Diversification Opportunities for Fleury SA and Biomm SA
Very weak diversification
The 3 months correlation between Fleury and Biomm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fleury SA and Biomm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomm SA and Fleury 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 Fleury SA are associated (or correlated) with Biomm SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomm SA has no effect on the direction of Fleury SA i.e., Fleury SA and Biomm SA go up and down completely randomly.
Pair Corralation between Fleury SA and Biomm SA
Assuming the 90 days trading horizon Fleury SA is expected to under-perform the Biomm SA. But the stock apears to be less risky and, when comparing its historical volatility, Fleury SA is 3.57 times less risky than Biomm SA. The stock trades about -0.03 of its potential returns per unit of risk. The Biomm SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Biomm SA on September 3, 2024 and sell it today you would lose (235.00) from holding Biomm SA or give up 22.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Fleury SA vs. Biomm SA
Performance |
| Timeline |
| Fleury SA |
| Biomm SA |
Fleury SA and Biomm SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fleury SA and Biomm SA
The main advantage of trading using opposite Fleury SA and Biomm SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fleury SA position performs unexpectedly, Biomm SA 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 Biomm SA will offset losses from the drop in Biomm SA's long position.| Fleury SA vs. Engie Brasil Energia | Fleury SA vs. WEG SA | Fleury SA vs. Ambev SA | Fleury SA vs. M Dias Branco |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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