Correlation Between Boiron SA and CHIBA BANK

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

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

Diversification Opportunities for Boiron SA and CHIBA BANK

-0.63

Correlation Coefficient

Boiron SA  CHIBA BANK

Excellent diversification

The 3 months correlation between Boiron and CHIBA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK 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 CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of Boiron SA i.e., Boiron SA and CHIBA BANK go up and down completely randomly.

Pair Corralation between Boiron SA and CHIBA BANK

Assuming the 90 days horizon Boiron SA is expected to generate 1.41 times more return on investment than CHIBA BANK. However, Boiron SA is 1.41 times more volatile than CHIBA BANK. It trades about 0.05 of its potential returns per unit of risk. CHIBA BANK is currently generating about -0.43 per unit of risk. If you would invest  2,625  in Boiron SA on October 4, 2024 and sell it today you would earn a total of  35.00  from holding Boiron SA or generate 1.33% return on investment over 90 days.

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

Boiron SA  vs.  CHIBA BANK

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 unsteady 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.

CHIBA BANK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CHIBA BANK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boiron SA and CHIBA BANK

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

The idea behind Boiron SA and CHIBA BANK 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.