Correlation Between Compagnie and Bollore SA

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

By analyzing existing cross correlation between Compagnie de lOdet and Bollore SA, you can compare the effects of market volatilities on Compagnie and Bollore 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 Bollore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Bollore SA.

Diversification Opportunities for Compagnie and Bollore SA

0.93

Correlation Coefficient

Compagnie  Bollore SA

Almost no diversification

The 3 months correlation between Compagnie and Bollore is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de lOdet and Bollore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bollore 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 lOdet are associated (or correlated) with Bollore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bollore SA has no effect on the direction of Compagnie i.e., Compagnie and Bollore SA go up and down completely randomly.

Pair Corralation between Compagnie and Bollore SA

Assuming the 90 days trading horizon Compagnie de lOdet is expected to under-perform the Bollore SA. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie de lOdet is 1.28 times less risky than Bollore SA. The stock trades about -0.64 of its potential returns per unit of risk. The Bollore SA is currently generating about -0.41 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Bollore SA on April 2, 2024 and sell it today you would lose (73.00) from holding Bollore SA or give up 11.76% of portfolio value over 90 days.

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

Compagnie de lOdet  vs.  Bollore SA

Compagnie de lOdet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie de lOdet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Compagnie and Bollore SA

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

The idea behind Compagnie de lOdet and Bollore 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.