Correlation Between Compagnie and BIO UV

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

By analyzing existing cross correlation between Compagnie de Saint Gobain and BIO UV Group, you can compare the effects of market volatilities on Compagnie and BIO UV 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 Compagnie with a short position of BIO UV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and BIO UV.

Diversification Opportunities for Compagnie and BIO UV

-0.18

Correlation Coefficient

Compagnie  BIO UV

Good diversification

The 3 months correlation between Compagnie and BIO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV Group and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Compagnie i.e., Compagnie and BIO UV go up and down completely randomly.

Pair Corralation between Compagnie and BIO UV

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 2.47 times more return on investment than BIO UV. However, Compagnie is 2.47 times more volatile than BIO UV Group. It trades about 0.15 of its potential returns per unit of risk. BIO UV Group is currently generating about -0.21 per unit of risk. If you would invest  9,058  in Compagnie de Saint Gobain on December 2, 2024 and sell it today you would earn a total of  614.00  from holding Compagnie de Saint Gobain or generate 6.78% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  BIO UV Group

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

BIO UV Group

Risk-Adjusted Performance

OK

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

Pair Trading with Compagnie and BIO UV

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

The idea behind Compagnie de Saint Gobain and BIO UV Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.