Correlation Between Memscap Regpt and Bouygues

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

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

Diversification Opportunities for Memscap Regpt and Bouygues

-0.5

Correlation Coefficient

Memscap Regpt  Bouygues

Very good diversification

The 3 months correlation between Memscap and Bouygues is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Memscap Regpt and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Memscap Regpt 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 Memscap Regpt are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Memscap Regpt i.e., Memscap Regpt and Bouygues go up and down completely randomly.

Pair Corralation between Memscap Regpt and Bouygues

Assuming the 90 days trading horizon Memscap Regpt is expected to generate 5.73 times more return on investment than Bouygues. However, Memscap Regpt is 5.73 times more volatile than Bouygues SA. It trades about 0.08 of its potential returns per unit of risk. Bouygues SA is currently generating about 0.37 per unit of risk. If you would invest  294.00  in Memscap Regpt on December 1, 2024 and sell it today you would earn a total of  56.00  from holding Memscap Regpt or generate 19.05% return on investment over 90 days.

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

Memscap Regpt  vs.  Bouygues SA

Memscap Regpt

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Memscap Regpt are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Memscap Regpt sustained solid returns over the last few months and may actually be approaching a breakup point.

Bouygues SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bouygues SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bouygues sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Memscap Regpt and Bouygues

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

The idea behind Memscap Regpt and Bouygues 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.