Correlation Between Socit BIC and Derichebourg

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

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

Diversification Opportunities for Socit BIC and Derichebourg

-0.45

Correlation Coefficient

Socit BIC  Derichebourg

Very good diversification

The 3 months correlation between Socit and Derichebourg is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg and Socit BIC 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 Socit BIC SA are associated (or correlated) with Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Socit BIC i.e., Socit BIC and Derichebourg go up and down completely randomly.

Pair Corralation between Socit BIC and Derichebourg

Assuming the 90 days horizon Socit BIC is expected to generate 13.43 times less return on investment than Derichebourg. But when comparing it to its historical volatility, Socit BIC SA is 1.71 times less risky than Derichebourg. It trades about 0.01 of its potential returns per unit of risk. Derichebourg is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Derichebourg on December 30, 2024 and sell it today you would earn a total of  49.00  from holding Derichebourg or generate 9.42% return on investment over 90 days.

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

Socit BIC SA  vs.  Derichebourg

Socit BIC SA

Risk-Adjusted Performance

Very Weak

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

Derichebourg

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Derichebourg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Socit BIC and Derichebourg

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

The idea behind Socit BIC SA and Derichebourg 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.