Correlation Between Biomm SA and Baumer SA

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

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

Diversification Opportunities for Biomm SA and Baumer SA

-0.04

Correlation Coefficient

Biomm SA  Baumer SA

Good diversification

The 3 months correlation between Biomm and Baumer is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Biomm SA and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA and Biomm SA 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 Biomm SA are associated (or correlated) with Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Biomm SA i.e., Biomm SA and Baumer SA go up and down completely randomly.

Pair Corralation between Biomm SA and Baumer SA

Assuming the 90 days trading horizon Biomm SA is expected to under-perform the Baumer SA. In addition to that, Biomm SA is 4.56 times more volatile than Baumer SA. It trades about -0.17 of its total potential returns per unit of risk. Baumer SA is currently generating about -0.2 per unit of volatility. If you would invest  1,340  in Baumer SA on September 5, 2024 and sell it today you would lose (40.00) from holding Baumer SA or give up 2.99% of portfolio value over 90 days.

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

Biomm SA  vs.  Baumer SA

Biomm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Baumer SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Baumer SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biomm SA and Baumer SA

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

The idea behind Biomm SA and Baumer 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.