Correlation Between Glob Bioenergi and Biophytis

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

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

Diversification Opportunities for Glob Bioenergi and Biophytis

0.53

Correlation Coefficient

Glob Bioenergi  Biophytis

Very weak diversification

The 3 months correlation between Glob and Biophytis is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Glob Bioenergi and Biophytis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis SA and Glob Bioenergi 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 Glob Bioenergi are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis SA has no effect on the direction of Glob Bioenergi i.e., Glob Bioenergi and Biophytis go up and down completely randomly.

Pair Corralation between Glob Bioenergi and Biophytis

Assuming the 90 days trading horizon Glob Bioenergi is expected to generate 3.11 times more return on investment than Biophytis. However, Glob Bioenergi is 3.11 times more volatile than Biophytis SA. It trades about 0.01 of its potential returns per unit of risk. Biophytis SA is currently generating about 0.01 per unit of risk. If you would invest  130.00  in Glob Bioenergi on October 3, 2024 and sell it today you would lose (44.00) from holding Glob Bioenergi or give up 33.85% of portfolio value over 90 days.

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

Glob Bioenergi  vs.  Biophytis SA

Glob Bioenergi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glob Bioenergi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Glob Bioenergi is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Biophytis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Biophytis is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Glob Bioenergi and Biophytis

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

The idea behind Glob Bioenergi and Biophytis 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.