Correlation Between BNP Paribas and GI Group

Can any of the company-specific risk be diversified away by investing in both BNP Paribas and GI Group 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 GI Group 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 GI Group Poland, you can compare the effects of market volatilities on BNP Paribas and GI Group 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 GI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and GI Group.

Diversification Opportunities for BNP Paribas and GI Group

0.65

Correlation Coefficient

BNP Paribas  GI Group

Poor diversification

The 3 months correlation between BNP and GIG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and GI Group Poland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GI Group Poland 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 GI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GI Group Poland has no effect on the direction of BNP Paribas i.e., BNP Paribas and GI Group go up and down completely randomly.

Pair Corralation between BNP Paribas and GI Group

Assuming the 90 days trading horizon BNP Paribas Bank is expected to under-perform the GI Group. In addition to that, BNP Paribas is 1.11 times more volatile than GI Group Poland. It trades about -0.16 of its total potential returns per unit of risk. GI Group Poland is currently generating about -0.13 per unit of volatility. If you would invest  170.00  in GI Group Poland on September 4, 2024 and sell it today you would lose (25.00) from holding GI Group Poland or give up 14.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

BNP Paribas Bank  vs.  GI Group Poland

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

GI Group Poland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GI Group Poland has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with BNP Paribas and GI Group

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

The idea behind BNP Paribas Bank and GI Group Poland 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.