Correlation Between Making Science and Bouygues

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

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

Diversification Opportunities for Making Science and Bouygues

0.26

Correlation Coefficient

Making Science  Bouygues

Modest diversification

The 3 months correlation between Making and Bouygues is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Making Science Group and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Making Science 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 Making Science Group are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Making Science i.e., Making Science and Bouygues go up and down completely randomly.

Pair Corralation between Making Science and Bouygues

Assuming the 90 days trading horizon Making Science Group is expected to generate 1.07 times more return on investment than Bouygues. However, Making Science is 1.07 times more volatile than Bouygues SA. It trades about -0.04 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.12 per unit of risk. If you would invest  855.00  in Making Science Group on September 27, 2024 and sell it today you would lose (35.00) from holding Making Science Group or give up 4.09% of portfolio value over 90 days.

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

Making Science Group  vs.  Bouygues SA

Making Science Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Making Science Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Making Science is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Bouygues SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bouygues SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Making Science and Bouygues

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

The idea behind Making Science Group and Bouygues 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.