Correlation Between Bains Mer and Biomerieux

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

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

Diversification Opportunities for Bains Mer and Biomerieux

0.61

Correlation Coefficient

Bains Mer  Biomerieux

Poor diversification

The 3 months correlation between Bains and Biomerieux is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bains Mer Monaco and Biomerieux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerieux SA and Bains Mer 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 Bains Mer Monaco are associated (or correlated) with Biomerieux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerieux SA has no effect on the direction of Bains Mer i.e., Bains Mer and Biomerieux go up and down completely randomly.

Pair Corralation between Bains Mer and Biomerieux

Assuming the 90 days trading horizon Bains Mer Monaco is expected to generate 1.34 times more return on investment than Biomerieux. However, Bains Mer is 1.34 times more volatile than Biomerieux SA. It trades about -0.02 of its potential returns per unit of risk. Biomerieux SA is currently generating about -0.03 per unit of risk. If you would invest  10,847  in Bains Mer Monaco on August 31, 2024 and sell it today you would lose (347.00) from holding Bains Mer Monaco or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Bains Mer Monaco  vs.  Biomerieux SA

Bains Mer Monaco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bains Mer Monaco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bains Mer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biomerieux SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomerieux SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Biomerieux is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bains Mer and Biomerieux

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

The idea behind Bains Mer Monaco and Biomerieux 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.