Correlation Between Bureau Veritas and Sgd Holdings

Can any of the company-specific risk be diversified away by investing in both Bureau Veritas and Sgd Holdings 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 Sgd Holdings 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 Sgd Holdings, you can compare the effects of market volatilities on Bureau Veritas and Sgd Holdings 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 Sgd Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bureau Veritas and Sgd Holdings.

Diversification Opportunities for Bureau Veritas and Sgd Holdings

0.3

Correlation Coefficient

Bureau Veritas  Sgd Holdings

Weak diversification

The 3 months correlation between Bureau and Sgd is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Sgd Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sgd Holdings 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 Sgd Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sgd Holdings has no effect on the direction of Bureau Veritas i.e., Bureau Veritas and Sgd Holdings go up and down completely randomly.

Pair Corralation between Bureau Veritas and Sgd Holdings

Assuming the 90 days horizon Bureau Veritas is expected to generate 12.7 times less return on investment than Sgd Holdings. But when comparing it to its historical volatility, Bureau Veritas SA is 5.92 times less risky than Sgd Holdings. It trades about 0.02 of its potential returns per unit of risk. Sgd Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.55  in Sgd Holdings on September 4, 2024 and sell it today you would lose (0.15) from holding Sgd Holdings or give up 27.27% of portfolio value over 90 days.

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

Bureau Veritas SA  vs.  Sgd Holdings

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sgd Holdings

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sgd Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Sgd Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bureau Veritas and Sgd Holdings

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

The idea behind Bureau Veritas SA and Sgd Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.