Correlation Between Socit BIC and Lagardere SCA

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

Diversification Opportunities for Socit BIC and Lagardere SCA

-0.09

Correlation Coefficient

Socit BIC  Lagardere SCA

Good diversification

The 3 months correlation between Socit and Lagardere is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Lagardere SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagardere SCA 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 Lagardere SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagardere SCA has no effect on the direction of Socit BIC i.e., Socit BIC and Lagardere SCA go up and down completely randomly.

Pair Corralation between Socit BIC and Lagardere SCA

Assuming the 90 days horizon Socit BIC SA is expected to generate 1.65 times more return on investment than Lagardere SCA. However, Socit BIC is 1.65 times more volatile than Lagardere SCA. It trades about 0.07 of its potential returns per unit of risk. Lagardere SCA is currently generating about -0.08 per unit of risk. If you would invest  5,930  in Socit BIC SA on October 9, 2024 and sell it today you would earn a total of  410.00  from holding Socit BIC SA or generate 6.91% return on investment over 90 days.

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

Socit BIC SA  vs.  Lagardere SCA

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.

Lagardere SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lagardere SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Lagardere SCA 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 Lagardere SCA

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

The idea behind Socit BIC SA and Lagardere SCA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.