Correlation Between Compagnie Des and Boiron SA

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

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

Diversification Opportunities for Compagnie Des and Boiron SA

-0.58

Correlation Coefficient

Compagnie Des  Boiron SA

Excellent diversification

The 3 months correlation between Compagnie and Boiron is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie des Alpes and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and Compagnie Des 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 Compagnie des Alpes are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of Compagnie Des i.e., Compagnie Des and Boiron SA go up and down completely randomly.

Pair Corralation between Compagnie Des and Boiron SA

Assuming the 90 days trading horizon Compagnie des Alpes is expected to generate 0.67 times more return on investment than Boiron SA. However, Compagnie des Alpes is 1.5 times less risky than Boiron SA. It trades about 0.09 of its potential returns per unit of risk. Boiron SA is currently generating about -0.05 per unit of risk. If you would invest  1,415  in Compagnie des Alpes on December 30, 2024 and sell it today you would earn a total of  97.00  from holding Compagnie des Alpes or generate 6.86% return on investment over 90 days.

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

Compagnie des Alpes  vs.  Boiron SA

Compagnie des Alpes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Alpes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Des may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Boiron SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Compagnie Des and Boiron SA

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

The idea behind Compagnie des Alpes and Boiron 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.

Check out your portfolio center.

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.