Correlation Between Compagnie and Burelle SA

Can any of the company-specific risk be diversified away by investing in both Compagnie and Burelle 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 Compagnie and Burelle SA 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 Burelle SA, you can compare the effects of market volatilities on Compagnie and Burelle 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 Compagnie with a short position of Burelle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Burelle SA.

Diversification Opportunities for Compagnie and Burelle SA

-0.42

Correlation Coefficient

Compagnie  Burelle SA

Very good diversification

The 3 months correlation between Compagnie and Burelle is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Burelle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burelle SA 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 Burelle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burelle SA has no effect on the direction of Compagnie i.e., Compagnie and Burelle SA go up and down completely randomly.

Pair Corralation between Compagnie and Burelle SA

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.97 times more return on investment than Burelle SA. However, Compagnie de Saint Gobain is 1.04 times less risky than Burelle SA. It trades about 0.12 of its potential returns per unit of risk. Burelle SA is currently generating about -0.21 per unit of risk. If you would invest  8,298  in Compagnie de Saint Gobain on September 1, 2024 and sell it today you would earn a total of  336.00  from holding Compagnie de Saint Gobain or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Compagnie de Saint Gobain  vs.  Burelle SA

Compagnie de Saint

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burelle SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie and Burelle SA

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

The idea behind Compagnie de Saint Gobain and Burelle 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.