Correlation Between SEB SA and Biomerieux

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

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

Diversification Opportunities for SEB SA and Biomerieux

0.23

Correlation Coefficient

SEB SA  Biomerieux

Modest diversification

The 3 months correlation between SEB and Biomerieux is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Biomerieux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerieux SA and SEB SA 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 SEB SA are associated (or correlated) with Biomerieux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerieux SA has no effect on the direction of SEB SA i.e., SEB SA and Biomerieux go up and down completely randomly.

Pair Corralation between SEB SA and Biomerieux

Assuming the 90 days horizon SEB SA is expected to generate 3.1 times less return on investment than Biomerieux. In addition to that, SEB SA is 1.38 times more volatile than Biomerieux SA. It trades about 0.05 of its total potential returns per unit of risk. Biomerieux SA is currently generating about 0.2 per unit of volatility. If you would invest  9,885  in Biomerieux SA on November 29, 2024 and sell it today you would earn a total of  1,575  from holding Biomerieux SA or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

SEB SA  vs.  Biomerieux SA

SEB SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEB SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biomerieux SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerieux SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Biomerieux sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEB SA and Biomerieux

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

The idea behind SEB SA and Biomerieux 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.