Correlation Between Burelle SA and Cegedim SA

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

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

Diversification Opportunities for Burelle SA and Cegedim SA

0.53

Correlation Coefficient

Burelle SA  Cegedim SA

Very weak diversification

The 3 months correlation between Burelle and Cegedim is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Burelle SA and Cegedim SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cegedim SA 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 Cegedim SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cegedim SA has no effect on the direction of Burelle SA i.e., Burelle SA and Cegedim SA go up and down completely randomly.

Pair Corralation between Burelle SA and Cegedim SA

Assuming the 90 days trading horizon Burelle SA is expected to generate 1.3 times more return on investment than Cegedim SA. However, Burelle SA is 1.3 times more volatile than Cegedim SA. It trades about -0.07 of its potential returns per unit of risk. Cegedim SA is currently generating about -0.15 per unit of risk. If you would invest  36,400  in Burelle SA on August 30, 2024 and sell it today you would lose (3,700) from holding Burelle SA or give up 10.16% of portfolio value over 90 days.

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

Burelle SA  vs.  Cegedim SA

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burelle SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cegedim SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cegedim SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Burelle SA and Cegedim SA

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

The idea behind Burelle SA and Cegedim SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.