Correlation Between Neurones and Boa Concept

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

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

Diversification Opportunities for Neurones and Boa Concept

0.41

Correlation Coefficient

Neurones  Boa Concept

Very weak diversification

The 3 months correlation between Neurones and Boa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Neurones and Boa Concept SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Concept SA and Neurones 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 Neurones are associated (or correlated) with Boa Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Concept SA has no effect on the direction of Neurones i.e., Neurones and Boa Concept go up and down completely randomly.

Pair Corralation between Neurones and Boa Concept

Assuming the 90 days trading horizon Neurones is expected to generate 1.88 times less return on investment than Boa Concept. But when comparing it to its historical volatility, Neurones is 2.14 times less risky than Boa Concept. It trades about 0.13 of its potential returns per unit of risk. Boa Concept SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,725  in Boa Concept SA on December 28, 2024 and sell it today you would earn a total of  415.00  from holding Boa Concept SA or generate 24.06% return on investment over 90 days.

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

Neurones  vs.  Boa Concept SA

Neurones

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neurones are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neurones sustained solid returns over the last few months and may actually be approaching a breakup point.

Boa Concept SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boa Concept SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Boa Concept reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neurones and Boa Concept

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

The idea behind Neurones and Boa Concept 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.