Correlation Between Armada Hflr and BNP Paribas

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

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

Diversification Opportunities for Armada Hflr and BNP Paribas

0.3

Correlation Coefficient

Armada Hflr  BNP Paribas

Weak diversification

The 3 months correlation between Armada and BNP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Armada Hflr i.e., Armada Hflr and BNP Paribas go up and down completely randomly.

Pair Corralation between Armada Hflr and BNP Paribas

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the BNP Paribas. In addition to that, Armada Hflr is 1.01 times more volatile than BNP Paribas SA. It trades about -0.29 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.05 per unit of volatility. If you would invest  5,708  in BNP Paribas SA on September 23, 2024 and sell it today you would earn a total of  68.00  from holding BNP Paribas SA or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  BNP Paribas SA

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Armada Hflr and BNP Paribas

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

The idea behind Armada Hflr Pr and BNP Paribas 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.