Correlation Between Eurazeo and Believe SAS

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

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

Diversification Opportunities for Eurazeo and Believe SAS

0.26

Correlation Coefficient

Eurazeo  Believe SAS

Modest diversification

The 3 months correlation between Eurazeo and Believe is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and Believe SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Believe SAS and Eurazeo 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 Eurazeo are associated (or correlated) with Believe SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Believe SAS has no effect on the direction of Eurazeo i.e., Eurazeo and Believe SAS go up and down completely randomly.

Pair Corralation between Eurazeo and Believe SAS

Assuming the 90 days horizon Eurazeo is expected to under-perform the Believe SAS. But the stock apears to be less risky and, when comparing its historical volatility, Eurazeo is 1.12 times less risky than Believe SAS. The stock trades about -0.01 of its potential returns per unit of risk. The Believe SAS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,494  in Believe SAS on December 5, 2024 and sell it today you would earn a total of  6.00  from holding Believe SAS or generate 0.4% return on investment over 90 days.

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

Eurazeo  vs.  Believe SAS

Eurazeo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eurazeo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eurazeo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Believe SAS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Believe SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Believe SAS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eurazeo and Believe SAS

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

The idea behind Eurazeo and Believe SAS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.