Correlation Between Armada Hflr and BNP PARIBAS

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

By analyzing existing cross correlation between Armada Hflr Pr and BNP PARIBAS ADR, you can compare the effects of market volatilities on Armada Hflr 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 Armada Hflr with a short position of BNP PARIBAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and BNP PARIBAS.

Diversification Opportunities for Armada Hflr and BNP PARIBAS

-0.87

Correlation Coefficient

Armada Hflr  BNP PARIBAS

Pay attention - limited upside

The 3 months correlation between Armada and BNP is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and BNP PARIBAS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP PARIBAS ADR and Armada Hflr 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 Armada Hflr Pr 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 ADR has no effect on the direction of Armada Hflr i.e., Armada Hflr and BNP PARIBAS go up and down completely randomly.

Pair Corralation between Armada Hflr and BNP PARIBAS

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the BNP PARIBAS. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.39 times less risky than BNP PARIBAS. The stock trades about -0.39 of its potential returns per unit of risk. The BNP PARIBAS ADR is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  3,160  in BNP PARIBAS ADR on December 5, 2024 and sell it today you would earn a total of  460.00  from holding BNP PARIBAS ADR or generate 14.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Armada Hflr Pr  vs.  BNP PARIBAS ADR

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr 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 technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

BNP PARIBAS ADR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BNP PARIBAS ADR are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BNP PARIBAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and BNP PARIBAS

The main advantage of trading using opposite Armada Hflr and BNP PARIBAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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's long position.

The idea behind Armada Hflr Pr and BNP PARIBAS ADR 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.