Correlation Between Socit BIC and Valeo SA

Can any of the company-specific risk be diversified away by investing in both Socit BIC and Valeo SA 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 Valeo SA 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 Valeo SA, you can compare the effects of market volatilities on Socit BIC and Valeo SA 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 Valeo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Socit BIC and Valeo SA.

Diversification Opportunities for Socit BIC and Valeo SA

-0.41

Correlation Coefficient

Socit BIC  Valeo SA

Very good diversification

The 3 months correlation between Socit and Valeo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Valeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo SA 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 Valeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SA has no effect on the direction of Socit BIC i.e., Socit BIC and Valeo SA go up and down completely randomly.

Pair Corralation between Socit BIC and Valeo SA

Assuming the 90 days horizon Socit BIC SA is expected to generate 0.46 times more return on investment than Valeo SA. However, Socit BIC SA is 2.16 times less risky than Valeo SA. It trades about 0.23 of its potential returns per unit of risk. Valeo SA is currently generating about 0.1 per unit of risk. If you would invest  6,140  in Socit BIC SA on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Socit BIC SA or generate 3.26% 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.  Valeo SA

Socit BIC SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Socit BIC SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Socit BIC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Valeo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Socit BIC and Valeo SA

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

The idea behind Socit BIC SA and Valeo 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.