Correlation Between Adocia and Boiron SA

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

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

Diversification Opportunities for Adocia and Boiron SA

0.17

Correlation Coefficient

Adocia  Boiron SA

Average diversification

The 3 months correlation between Adocia and Boiron is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and Adocia 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 Adocia are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of Adocia i.e., Adocia and Boiron SA go up and down completely randomly.

Pair Corralation between Adocia and Boiron SA

Assuming the 90 days trading horizon Adocia is expected to under-perform the Boiron SA. In addition to that, Adocia is 2.26 times more volatile than Boiron SA. It trades about -0.3 of its total potential returns per unit of risk. Boiron SA is currently generating about 0.03 per unit of volatility. If you would invest  2,650  in Boiron SA on September 28, 2024 and sell it today you would earn a total of  20.00  from holding Boiron SA or generate 0.75% return on investment over 90 days.

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

Adocia  vs.  Boiron SA

Adocia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adocia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adocia sustained solid returns over the last few months and may actually be approaching a breakup point.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adocia and Boiron SA

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

The idea behind Adocia and Boiron 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..