Correlation Between Bilendi and La Francaise

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

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

Diversification Opportunities for Bilendi and La Francaise

-0.44

Correlation Coefficient

Bilendi  La Francaise

Very good diversification

The 3 months correlation between Bilendi and FDJ is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bilendi and La Francaise Des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Francaise Des and Bilendi 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 Bilendi are associated (or correlated) with La Francaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Francaise Des has no effect on the direction of Bilendi i.e., Bilendi and La Francaise go up and down completely randomly.

Pair Corralation between Bilendi and La Francaise

Assuming the 90 days trading horizon Bilendi is expected to generate 3.53 times more return on investment than La Francaise. However, Bilendi is 3.53 times more volatile than La Francaise Des. It trades about 0.45 of its potential returns per unit of risk. La Francaise Des is currently generating about -0.1 per unit of risk. If you would invest  1,345  in Bilendi on October 10, 2024 and sell it today you would earn a total of  440.00  from holding Bilendi or generate 32.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Bilendi  vs.  La Francaise Des

Bilendi

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

La Francaise Des

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in La Francaise Des are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, La Francaise is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bilendi and La Francaise

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

The idea behind Bilendi and La Francaise Des 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.