Correlation Between Bureau Veritas and Ipsos SA

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

Diversification Opportunities for Bureau Veritas and Ipsos SA

0.65

Correlation Coefficient

Bureau Veritas  Ipsos SA

Poor diversification

The 3 months correlation between Bureau and Ipsos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Ipsos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsos SA 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 Ipsos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsos SA has no effect on the direction of Bureau Veritas i.e., Bureau Veritas and Ipsos SA go up and down completely randomly.

Pair Corralation between Bureau Veritas and Ipsos SA

Assuming the 90 days horizon Bureau Veritas SA is expected to under-perform the Ipsos SA. In addition to that, Bureau Veritas is 2.01 times more volatile than Ipsos SA. It trades about -0.1 of its total potential returns per unit of risk. Ipsos SA is currently generating about -0.11 per unit of volatility. If you would invest  6,511  in Ipsos SA on September 4, 2024 and sell it today you would lose (278.00) from holding Ipsos SA or give up 4.27% of portfolio value over 90 days.

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

Bureau Veritas SA  vs.  Ipsos SA

Bureau Veritas SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ipsos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ipsos SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bureau Veritas and Ipsos SA

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

The idea behind Bureau Veritas SA and Ipsos 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.