Correlation Between Boiron SA and Affluent Medical

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

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

Diversification Opportunities for Boiron SA and Affluent Medical

0.23

Correlation Coefficient

Boiron SA  Affluent Medical

Modest diversification

The 3 months correlation between Boiron and Affluent is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Affluent Medical SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affluent Medical SAS and Boiron 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 Boiron SA are associated (or correlated) with Affluent Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affluent Medical SAS has no effect on the direction of Boiron SA i.e., Boiron SA and Affluent Medical go up and down completely randomly.

Pair Corralation between Boiron SA and Affluent Medical

Assuming the 90 days trading horizon Boiron SA is expected to under-perform the Affluent Medical. But the stock apears to be less risky and, when comparing its historical volatility, Boiron SA is 1.29 times less risky than Affluent Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Affluent Medical SAS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Affluent Medical SAS on December 24, 2024 and sell it today you would lose (9.00) from holding Affluent Medical SAS or give up 6.12% of portfolio value over 90 days.

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

Boiron SA  vs.  Affluent Medical SAS

Boiron SA

Risk-Adjusted Performance

Very Weak

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

Affluent Medical SAS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Boiron SA and Affluent Medical

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

The idea behind Boiron SA and Affluent Medical SAS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.