Correlation Between Boiron SA and American States

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

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

Diversification Opportunities for Boiron SA and American States

-0.34

Correlation Coefficient

Boiron SA  American States

Very good diversification

The 3 months correlation between Boiron and American is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Boiron SA i.e., Boiron SA and American States go up and down completely randomly.

Pair Corralation between Boiron SA and American States

Assuming the 90 days horizon Boiron SA is expected to under-perform the American States. In addition to that, Boiron SA is 1.5 times more volatile than American States Water. It trades about -0.02 of its total potential returns per unit of risk. American States Water is currently generating about -0.01 per unit of volatility. If you would invest  8,380  in American States Water on October 4, 2024 and sell it today you would lose (990.00) from holding American States Water or give up 11.81% of portfolio value over 90 days.

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

Boiron SA  vs.  American States Water

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.

American States Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American States Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boiron SA and American States

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

The idea behind Boiron SA and American States Water 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.