Correlation Between BNP Paribas and Betacom SA

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

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

Diversification Opportunities for BNP Paribas and Betacom SA

0.57

Correlation Coefficient

BNP Paribas  Betacom SA

Very weak diversification

The 3 months correlation between BNP and Betacom is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and Betacom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betacom 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 Bank are associated (or correlated) with Betacom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betacom SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Betacom SA go up and down completely randomly.

Pair Corralation between BNP Paribas and Betacom SA

Assuming the 90 days trading horizon BNP Paribas Bank is expected to generate 0.88 times more return on investment than Betacom SA. However, BNP Paribas Bank is 1.14 times less risky than Betacom SA. It trades about 0.06 of its potential returns per unit of risk. Betacom SA is currently generating about 0.03 per unit of risk. If you would invest  5,125  in BNP Paribas Bank on October 23, 2024 and sell it today you would earn a total of  3,655  from holding BNP Paribas Bank or generate 71.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

BNP Paribas Bank  vs.  Betacom SA

BNP Paribas Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BNP Paribas is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Betacom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Betacom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Betacom SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BNP Paribas and Betacom SA

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

The idea behind BNP Paribas Bank and Betacom 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.