Correlation Between Prodways Group and Balyo SA

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

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

Diversification Opportunities for Prodways Group and Balyo SA

0.71

Correlation Coefficient

Prodways Group  Balyo SA

Poor diversification

The 3 months correlation between Prodways and Balyo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prodways Group SA and Balyo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balyo SA and Prodways Group 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 Prodways Group SA are associated (or correlated) with Balyo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balyo SA has no effect on the direction of Prodways Group i.e., Prodways Group and Balyo SA go up and down completely randomly.

Pair Corralation between Prodways Group and Balyo SA

Assuming the 90 days trading horizon Prodways Group is expected to generate 2.97 times less return on investment than Balyo SA. But when comparing it to its historical volatility, Prodways Group SA is 1.25 times less risky than Balyo SA. It trades about 0.05 of its potential returns per unit of risk. Balyo SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Balyo SA on December 31, 2024 and sell it today you would earn a total of  9.00  from holding Balyo SA or generate 32.14% return on investment over 90 days.

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

Prodways Group SA  vs.  Balyo SA

Prodways Group SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prodways Group SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Prodways Group may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Balyo SA

Risk-Adjusted Performance

OK

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

Pair Trading with Prodways Group and Balyo SA

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

The idea behind Prodways Group SA and Balyo 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.