Correlation Between Bureau Veritas and Booz Allen

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

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

Diversification Opportunities for Bureau Veritas and Booz Allen

0.4

Correlation Coefficient

Bureau Veritas  Booz Allen

Very weak diversification

The 3 months correlation between Bureau and Booz is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Booz Allen Hamilton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booz Allen Hamilton and Bureau Veritas 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 Bureau Veritas SA are associated (or correlated) with Booz Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booz Allen Hamilton has no effect on the direction of Bureau Veritas i.e., Bureau Veritas and Booz Allen go up and down completely randomly.

Pair Corralation between Bureau Veritas and Booz Allen

Assuming the 90 days horizon Bureau Veritas SA is expected to generate 0.67 times more return on investment than Booz Allen. However, Bureau Veritas SA is 1.49 times less risky than Booz Allen. It trades about 0.04 of its potential returns per unit of risk. Booz Allen Hamilton is currently generating about -0.02 per unit of risk. If you would invest  2,895  in Bureau Veritas SA on September 3, 2024 and sell it today you would earn a total of  90.00  from holding Bureau Veritas SA or generate 3.11% return on investment over 90 days.

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

Bureau Veritas SA  vs.  Booz Allen Hamilton

Bureau Veritas SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bureau Veritas SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Bureau Veritas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Booz Allen Hamilton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Booz Allen Hamilton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Booz Allen is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bureau Veritas and Booz Allen

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

The idea behind Bureau Veritas SA and Booz Allen Hamilton 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.