Correlation Between Herige SA and Boa Concept
Can any of the company-specific risk be diversified away by investing in both Herige SA and Boa Concept 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 Herige SA and Boa Concept into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herige SA and Boa Concept SA, you can compare the effects of market volatilities on Herige SA and Boa Concept 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 Herige SA with a short position of Boa Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herige SA and Boa Concept.
Diversification Opportunities for Herige SA and Boa Concept
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Herige and Boa is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Herige SA and Boa Concept SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Concept SA and Herige SA 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 Herige SA are associated (or correlated) with Boa Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Concept SA has no effect on the direction of Herige SA i.e., Herige SA and Boa Concept go up and down completely randomly.
Pair Corralation between Herige SA and Boa Concept
Assuming the 90 days trading horizon Herige SA is expected to generate 5.56 times more return on investment than Boa Concept. However, Herige SA is 5.56 times more volatile than Boa Concept SA. It trades about 0.16 of its potential returns per unit of risk. Boa Concept SA is currently generating about 0.15 per unit of risk. If you would invest 2,340 in Herige SA on September 16, 2024 and sell it today you would earn a total of 190.00 from holding Herige SA or generate 8.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Herige SA vs. Boa Concept SA
Performance |
Timeline |
Herige SA |
Boa Concept SA |
Herige SA and Boa Concept Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Herige SA and Boa Concept
The main advantage of trading using opposite Herige SA and Boa Concept positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herige SA position performs unexpectedly, Boa Concept 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 Boa Concept will offset losses from the drop in Boa Concept's long position.Herige SA vs. Rubis SCA | Herige SA vs. Eramet SA | Herige SA vs. Nexity | Herige SA vs. Compagnie de Saint Gobain |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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