Correlation Between BNP Paribas and Adomos SA

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

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

Diversification Opportunities for BNP Paribas and Adomos SA

0.28

Correlation Coefficient

BNP Paribas  Adomos SA

Modest diversification

The 3 months correlation between BNP and Adomos is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Adomos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adomos SA and BNP Paribas 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 BNP Paribas SA are associated (or correlated) with Adomos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adomos SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Adomos SA go up and down completely randomly.

Pair Corralation between BNP Paribas and Adomos SA

Assuming the 90 days trading horizon BNP Paribas is expected to generate 7.19 times less return on investment than Adomos SA. But when comparing it to its historical volatility, BNP Paribas SA is 16.46 times less risky than Adomos SA. It trades about 0.03 of its potential returns per unit of risk. Adomos SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,800  in Adomos SA on September 24, 2024 and sell it today you would lose (3,800) from holding Adomos SA or give up 100.0% of portfolio value over 90 days.

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

BNP Paribas SA  vs.  Adomos SA

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Adomos SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adomos SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adomos SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BNP Paribas and Adomos SA

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

The idea behind BNP Paribas SA and Adomos 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.