Correlation Between Genfit and BBB Foods

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

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

Diversification Opportunities for Genfit and BBB Foods

0.21

Correlation Coefficient

Genfit  BBB Foods

Modest diversification

The 3 months correlation between Genfit and BBB is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Genfit 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 Genfit are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Genfit i.e., Genfit and BBB Foods go up and down completely randomly.

Pair Corralation between Genfit and BBB Foods

Given the investment horizon of 90 days Genfit is expected to generate 1.5 times more return on investment than BBB Foods. However, Genfit is 1.5 times more volatile than BBB Foods. It trades about 0.0 of its potential returns per unit of risk. BBB Foods is currently generating about -0.09 per unit of risk. If you would invest  379.00  in Genfit on December 18, 2024 and sell it today you would lose (15.00) from holding Genfit or give up 3.96% of portfolio value over 90 days.

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

Genfit  vs.  BBB Foods

Genfit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Genfit and BBB Foods

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

The idea behind Genfit and BBB Foods 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.