Correlation Between Socit BIC and Wendel

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

Diversification Opportunities for Socit BIC and Wendel

0.23

Correlation Coefficient

Socit BIC  Wendel

Modest diversification

The 3 months correlation between Socit and Wendel is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Wendel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wendel 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 Wendel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wendel has no effect on the direction of Socit BIC i.e., Socit BIC and Wendel go up and down completely randomly.

Pair Corralation between Socit BIC and Wendel

Assuming the 90 days horizon Socit BIC SA is expected to generate 0.93 times more return on investment than Wendel. However, Socit BIC SA is 1.07 times less risky than Wendel. It trades about 0.01 of its potential returns per unit of risk. Wendel is currently generating about -0.02 per unit of risk. If you would invest  6,290  in Socit BIC SA on December 29, 2024 and sell it today you would earn a total of  20.00  from holding Socit BIC SA or generate 0.32% return on investment over 90 days.

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

Socit BIC SA  vs.  Wendel

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.

Wendel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Socit BIC and Wendel

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

The idea behind Socit BIC SA and Wendel 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .