Correlation Between BEKA LUX and Amundi Label

Can any of the company-specific risk be diversified away by investing in both BEKA LUX and Amundi Label 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 BEKA LUX and Amundi Label into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BEKA LUX SICAV and Amundi Label Actions, you can compare the effects of market volatilities on BEKA LUX and Amundi Label 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 BEKA LUX with a short position of Amundi Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEKA LUX and Amundi Label.

Diversification Opportunities for BEKA LUX and Amundi Label

0.5

Correlation Coefficient

BEKA LUX  Amundi Label

Very weak diversification

The 3 months correlation between BEKA and Amundi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BEKA LUX SICAV and Amundi Label Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Actions and BEKA LUX 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 BEKA LUX SICAV are associated (or correlated) with Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Actions has no effect on the direction of BEKA LUX i.e., BEKA LUX and Amundi Label go up and down completely randomly.

Pair Corralation between BEKA LUX and Amundi Label

Assuming the 90 days trading horizon BEKA LUX is expected to generate 16.31 times less return on investment than Amundi Label. But when comparing it to its historical volatility, BEKA LUX SICAV is 2.87 times less risky than Amundi Label. It trades about 0.03 of its potential returns per unit of risk. Amundi Label Actions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  30,150  in Amundi Label Actions on December 26, 2024 and sell it today you would earn a total of  2,974  from holding Amundi Label Actions or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BEKA LUX SICAV  vs.  Amundi Label Actions

BEKA LUX SICAV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BEKA LUX SICAV are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, BEKA LUX is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Amundi Label Actions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Label Actions are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Amundi Label may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BEKA LUX and Amundi Label

The main advantage of trading using opposite BEKA LUX and Amundi Label positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEKA LUX position performs unexpectedly, Amundi Label 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 Amundi Label will offset losses from the drop in Amundi Label's long position.

The idea behind BEKA LUX SICAV and Amundi Label Actions 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.