Correlation Between Biomerieux and Eurofins Scientific

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

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

Diversification Opportunities for Biomerieux and Eurofins Scientific

0.72

Correlation Coefficient

Biomerieux  Eurofins Scientific

Poor diversification

The 3 months correlation between Biomerieux and Eurofins is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Biomerieux SA and Eurofins Scientific SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurofins Scientific and Biomerieux 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 Biomerieux SA are associated (or correlated) with Eurofins Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurofins Scientific has no effect on the direction of Biomerieux i.e., Biomerieux and Eurofins Scientific go up and down completely randomly.

Pair Corralation between Biomerieux and Eurofins Scientific

Assuming the 90 days trading horizon Biomerieux SA is expected to generate 0.73 times more return on investment than Eurofins Scientific. However, Biomerieux SA is 1.37 times less risky than Eurofins Scientific. It trades about 0.2 of its potential returns per unit of risk. Eurofins Scientific SE is currently generating about 0.05 per unit of risk. If you would invest  9,885  in Biomerieux SA on November 29, 2024 and sell it today you would earn a total of  1,575  from holding Biomerieux SA or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Biomerieux SA  vs.  Eurofins Scientific SE

Biomerieux SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerieux SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Biomerieux sustained solid returns over the last few months and may actually be approaching a breakup point.

Eurofins Scientific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eurofins Scientific SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Eurofins Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biomerieux and Eurofins Scientific

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

The idea behind Biomerieux SA and Eurofins Scientific SE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.