Correlation Between Bollore SA and Compagnie Des

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

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

Diversification Opportunities for Bollore SA and Compagnie Des

-0.58

Correlation Coefficient

Bollore SA  Compagnie Des

Excellent diversification

The 3 months correlation between Bollore and Compagnie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bollore SA and Compagnie des Tramways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie des Tramways and Bollore 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 Bollore SA are associated (or correlated) with Compagnie Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie des Tramways has no effect on the direction of Bollore SA i.e., Bollore SA and Compagnie Des go up and down completely randomly.

Pair Corralation between Bollore SA and Compagnie Des

Assuming the 90 days trading horizon Bollore SA is expected to under-perform the Compagnie Des. In addition to that, Bollore SA is 5.18 times more volatile than Compagnie des Tramways. It trades about -0.34 of its total potential returns per unit of risk. Compagnie des Tramways is currently generating about -0.04 per unit of volatility. If you would invest  556,283  in Compagnie des Tramways on March 31, 2024 and sell it today you would lose (1,283) from holding Compagnie des Tramways or give up 0.23% of portfolio value over 90 days.

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

Bollore SA  vs.  Compagnie des Tramways

Bollore SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Compagnie des Tramways

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Tramways are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Compagnie Des is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bollore SA and Compagnie Des

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

The idea behind Bollore SA and Compagnie des Tramways 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.