Correlation Between Boiron SA and Reworld Media

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

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

Diversification Opportunities for Boiron SA and Reworld Media

0.77

Correlation Coefficient

Boiron SA  Reworld Media

Poor diversification

The 3 months correlation between Boiron and Reworld is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Reworld Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reworld Media 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 Reworld Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reworld Media has no effect on the direction of Boiron SA i.e., Boiron SA and Reworld Media go up and down completely randomly.

Pair Corralation between Boiron SA and Reworld Media

Assuming the 90 days trading horizon Boiron SA is expected to generate 0.54 times more return on investment than Reworld Media. However, Boiron SA is 1.86 times less risky than Reworld Media. It trades about -0.14 of its potential returns per unit of risk. Reworld Media is currently generating about -0.1 per unit of risk. If you would invest  3,230  in Boiron SA on September 15, 2024 and sell it today you would lose (555.00) from holding Boiron SA or give up 17.18% of portfolio value over 90 days.

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

Boiron SA  vs.  Reworld Media

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Reworld Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reworld Media 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 Boiron SA and Reworld Media

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

The idea behind Boiron SA and Reworld Media 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.