Correlation Between SOEDER SPORTFISKE and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both SOEDER SPORTFISKE 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 SOEDER SPORTFISKE and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOEDER SPORTFISKE AB and BNP Paribas SA, you can compare the effects of market volatilities on SOEDER SPORTFISKE 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 SOEDER SPORTFISKE with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOEDER SPORTFISKE and BNP Paribas.

Diversification Opportunities for SOEDER SPORTFISKE and BNP Paribas

0.85

Correlation Coefficient

SOEDER SPORTFISKE  BNP Paribas

Very poor diversification

The 3 months correlation between SOEDER and BNP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SOEDER SPORTFISKE AB and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and SOEDER SPORTFISKE 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 SOEDER SPORTFISKE AB 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 SA has no effect on the direction of SOEDER SPORTFISKE i.e., SOEDER SPORTFISKE and BNP Paribas go up and down completely randomly.

Pair Corralation between SOEDER SPORTFISKE and BNP Paribas

Assuming the 90 days horizon SOEDER SPORTFISKE is expected to generate 1.27 times less return on investment than BNP Paribas. In addition to that, SOEDER SPORTFISKE is 1.92 times more volatile than BNP Paribas SA. It trades about 0.14 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.34 per unit of volatility. If you would invest  5,746  in BNP Paribas SA on December 22, 2024 and sell it today you would earn a total of  2,228  from holding BNP Paribas SA or generate 38.77% return on investment over 90 days.

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

SOEDER SPORTFISKE AB  vs.  BNP Paribas SA

SOEDER SPORTFISKE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOEDER SPORTFISKE AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOEDER SPORTFISKE reported solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BNP Paribas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOEDER SPORTFISKE and BNP Paribas

The main advantage of trading using opposite SOEDER SPORTFISKE and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOEDER SPORTFISKE 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 SOEDER SPORTFISKE AB and BNP Paribas 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.