Correlation Between Orapi SA and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Orapi SA and BNP Paribas 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 Orapi SA and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orapi SA and BNP Paribas Easy, you can compare the effects of market volatilities on Orapi SA and BNP Paribas 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 Orapi SA with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orapi SA and BNP Paribas.
Diversification Opportunities for Orapi SA and BNP Paribas
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orapi and BNP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Orapi SA and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and Orapi 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 Orapi SA are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Orapi SA i.e., Orapi SA and BNP Paribas go up and down completely randomly.
Pair Corralation between Orapi SA and BNP Paribas
Assuming the 90 days trading horizon Orapi SA is expected to generate 1.01 times less return on investment than BNP Paribas. But when comparing it to its historical volatility, Orapi SA is 1.38 times less risky than BNP Paribas. It trades about 0.21 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 924.00 in BNP Paribas Easy on August 30, 2024 and sell it today you would earn a total of 6.00 from holding BNP Paribas Easy or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orapi SA vs. BNP Paribas Easy
Performance |
| Timeline |
| Orapi SA |
| BNP Paribas Easy |
Orapi SA and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orapi SA and BNP Paribas
The main advantage of trading using opposite Orapi SA and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orapi SA position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.The idea behind Orapi SA and BNP Paribas Easy 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.| BNP Paribas vs. BNP PARIBAS EASY | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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