Correlation Between Encres Dubuit and Biosynex

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

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

Diversification Opportunities for Encres Dubuit and Biosynex

-0.78

Correlation Coefficient

Encres Dubuit  Biosynex

Pay attention - limited upside

The 3 months correlation between Encres and Biosynex is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Encres Dubuit SA and Biosynex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biosynex and Encres Dubuit 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 Encres Dubuit SA are associated (or correlated) with Biosynex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biosynex has no effect on the direction of Encres Dubuit i.e., Encres Dubuit and Biosynex go up and down completely randomly.

Pair Corralation between Encres Dubuit and Biosynex

Assuming the 90 days trading horizon Encres Dubuit SA is expected to generate 0.35 times more return on investment than Biosynex. However, Encres Dubuit SA is 2.83 times less risky than Biosynex. It trades about 0.1 of its potential returns per unit of risk. Biosynex is currently generating about -0.54 per unit of risk. If you would invest  270.00  in Encres Dubuit SA on September 25, 2024 and sell it today you would earn a total of  12.00  from holding Encres Dubuit SA or generate 4.44% return on investment over 90 days.

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

Encres Dubuit SA  vs.  Biosynex

Encres Dubuit SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Encres Dubuit SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Encres Dubuit reported solid returns over the last few months and may actually be approaching a breakup point.

Biosynex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biosynex has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Encres Dubuit and Biosynex

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

The idea behind Encres Dubuit SA and Biosynex 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.