Correlation Between Boiron SA and H-FARM SPA

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

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

Diversification Opportunities for Boiron SA and H-FARM SPA

0.7

Correlation Coefficient

Boiron SA  H-FARM SPA

Poor diversification

The 3 months correlation between Boiron and H-FARM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H-FARM SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Boiron SA i.e., Boiron SA and H-FARM SPA go up and down completely randomly.

Pair Corralation between Boiron SA and H-FARM SPA

Assuming the 90 days horizon Boiron SA is expected to under-perform the H-FARM SPA. But the stock apears to be less risky and, when comparing its historical volatility, Boiron SA is 2.3 times less risky than H-FARM SPA. The stock trades about -0.02 of its potential returns per unit of risk. The H FARM SPA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  21.00  in H FARM SPA on October 4, 2024 and sell it today you would lose (9.00) from holding H FARM SPA or give up 42.86% 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.  H FARM SPA

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Boiron SA and H-FARM SPA

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

The idea behind Boiron SA and H FARM SPA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.