Correlation Between Boiron SA and Compagnie Des

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

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

Diversification Opportunities for Boiron SA and Compagnie Des

-0.58

Correlation Coefficient

Boiron SA  Compagnie Des

Excellent diversification

The 3 months correlation between Boiron and Compagnie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Compagnie des Alpes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie des Alpes 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 Compagnie Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie des Alpes has no effect on the direction of Boiron SA i.e., Boiron SA and Compagnie Des go up and down completely randomly.

Pair Corralation between Boiron SA and Compagnie Des

Assuming the 90 days trading horizon Boiron SA is expected to under-perform the Compagnie Des. In addition to that, Boiron SA is 1.5 times more volatile than Compagnie des Alpes. It trades about -0.05 of its total potential returns per unit of risk. Compagnie des Alpes is currently generating about 0.09 per unit of volatility. If you would invest  1,415  in Compagnie des Alpes on December 30, 2024 and sell it today you would earn a total of  97.00  from holding Compagnie des Alpes or generate 6.86% return on investment over 90 days.

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

Boiron SA  vs.  Compagnie des Alpes

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 somewhat strong forward indicators, Boiron SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compagnie des Alpes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Alpes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Des may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Boiron SA and Compagnie Des

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

The idea behind Boiron SA and Compagnie des Alpes 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.