Correlation Between Burelle SA and Vente Unique

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

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

Diversification Opportunities for Burelle SA and Vente Unique

-0.61

Correlation Coefficient

Burelle SA  Vente Unique

Excellent diversification

The 3 months correlation between Burelle and Vente is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Burelle SA and Vente Unique in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vente Unique and Burelle 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 Burelle SA are associated (or correlated) with Vente Unique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vente Unique has no effect on the direction of Burelle SA i.e., Burelle SA and Vente Unique go up and down completely randomly.

Pair Corralation between Burelle SA and Vente Unique

Assuming the 90 days trading horizon Burelle SA is expected to generate 1.23 times more return on investment than Vente Unique. However, Burelle SA is 1.23 times more volatile than Vente Unique. It trades about 0.04 of its potential returns per unit of risk. Vente Unique is currently generating about -0.05 per unit of risk. If you would invest  31,900  in Burelle SA on December 30, 2024 and sell it today you would earn a total of  1,400  from holding Burelle SA or generate 4.39% return on investment over 90 days.

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

Burelle SA  vs.  Vente Unique

Burelle SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burelle SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Burelle SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vente Unique

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vente Unique has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vente Unique is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Burelle SA and Vente Unique

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

The idea behind Burelle SA and Vente Unique 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.