Correlation Between Les Htels and Barbara Bui

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

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

Diversification Opportunities for Les Htels and Barbara Bui

0.65

Correlation Coefficient

Les Htels  Barbara Bui

Poor diversification

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

Pair Corralation between Les Htels and Barbara Bui

Assuming the 90 days trading horizon Les Htels de is expected to generate 2.15 times more return on investment than Barbara Bui. However, Les Htels is 2.15 times more volatile than Barbara Bui SA. It trades about -0.01 of its potential returns per unit of risk. Barbara Bui SA is currently generating about -0.2 per unit of risk. If you would invest  133.00  in Les Htels de on September 15, 2024 and sell it today you would lose (13.00) from holding Les Htels de or give up 9.77% of portfolio value over 90 days.

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

Les Htels de  vs.  Barbara Bui SA

Les Htels de

Risk-Adjusted Performance

0 of 100

Very Weak

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

Barbara Bui SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Les Htels and Barbara Bui

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

The idea behind Les Htels de and Barbara Bui 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.