Correlation Between Believe SAS and Eurazeo

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

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

Diversification Opportunities for Believe SAS and Eurazeo

0.6

Correlation Coefficient

Believe SAS  Eurazeo

Poor diversification

The 3 months correlation between Believe and Eurazeo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Believe SAS and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo and Believe SAS 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 Believe SAS are associated (or correlated) with Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of Believe SAS i.e., Believe SAS and Eurazeo go up and down completely randomly.

Pair Corralation between Believe SAS and Eurazeo

Assuming the 90 days trading horizon Believe SAS is expected to generate 1.44 times more return on investment than Eurazeo. However, Believe SAS is 1.44 times more volatile than Eurazeo. It trades about 0.0 of its potential returns per unit of risk. Eurazeo is currently generating about -0.03 per unit of risk. If you would invest  1,500  in Believe SAS on September 17, 2024 and sell it today you would lose (62.00) from holding Believe SAS or give up 4.13% of portfolio value over 90 days.

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

Believe SAS  vs.  Eurazeo

Believe SAS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eurazeo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Believe SAS and Eurazeo

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

The idea behind Believe SAS and Eurazeo 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.