Correlation Between Bouygues and Poxel SA

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

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

Diversification Opportunities for Bouygues and Poxel SA

0.91

Correlation Coefficient

Bouygues  Poxel SA

Almost no diversification

The 3 months correlation between Bouygues and Poxel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA and Bouygues 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 Bouygues SA are associated (or correlated) with Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Bouygues i.e., Bouygues and Poxel SA go up and down completely randomly.

Pair Corralation between Bouygues and Poxel SA

Assuming the 90 days horizon Bouygues SA is expected to under-perform the Poxel SA. But the stock apears to be less risky and, when comparing its historical volatility, Bouygues SA is 6.29 times less risky than Poxel SA. The stock trades about -0.05 of its potential returns per unit of risk. The Poxel SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Poxel SA on September 2, 2024 and sell it today you would lose (17.00) from holding Poxel SA or give up 47.22% of portfolio value over 90 days.

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

Bouygues SA  vs.  Poxel SA

Bouygues SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bouygues 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.

Poxel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poxel SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bouygues and Poxel SA

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

The idea behind Bouygues SA and Poxel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.