Correlation Between Bouygues and Energy Services

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

By analyzing existing cross correlation between Bouygues SA and Energy Services, you can compare the effects of market volatilities on Bouygues and Energy Services 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 Bouygues with a short position of Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Energy Services.

Diversification Opportunities for Bouygues and Energy Services

-0.56

Correlation Coefficient

Bouygues  Energy Services

Excellent diversification

The 3 months correlation between Bouygues and Energy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Bouygues 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 Bouygues SA are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Bouygues i.e., Bouygues and Energy Services go up and down completely randomly.

Pair Corralation between Bouygues and Energy Services

Assuming the 90 days horizon Bouygues SA is expected to generate 0.42 times more return on investment than Energy Services. However, Bouygues SA is 2.38 times less risky than Energy Services. It trades about 0.23 of its potential returns per unit of risk. Energy Services is currently generating about -0.06 per unit of risk. If you would invest  2,956  in Bouygues SA on December 30, 2024 and sell it today you would earn a total of  884.00  from holding Bouygues SA or generate 29.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Bouygues SA  vs.  Energy Services

Bouygues SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bouygues SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bouygues reported solid returns over the last few months and may actually be approaching a breakup point.

Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Services 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bouygues and Energy Services

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

The idea behind Bouygues SA and Energy Services 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.