Correlation Between Bains Mer and Cerinnov Group

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

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

Diversification Opportunities for Bains Mer and Cerinnov Group

0.73

Correlation Coefficient

Bains Mer  Cerinnov Group

Poor diversification

The 3 months correlation between Bains and Cerinnov is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bains Mer Monaco and Cerinnov Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerinnov Group SA and Bains Mer 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 Bains Mer Monaco are associated (or correlated) with Cerinnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerinnov Group SA has no effect on the direction of Bains Mer i.e., Bains Mer and Cerinnov Group go up and down completely randomly.

Pair Corralation between Bains Mer and Cerinnov Group

Assuming the 90 days trading horizon Bains Mer Monaco is expected to generate 0.3 times more return on investment than Cerinnov Group. However, Bains Mer Monaco is 3.31 times less risky than Cerinnov Group. It trades about -0.07 of its potential returns per unit of risk. Cerinnov Group SA is currently generating about -0.05 per unit of risk. If you would invest  11,044  in Bains Mer Monaco on September 27, 2024 and sell it today you would lose (894.00) from holding Bains Mer Monaco or give up 8.09% of portfolio value over 90 days.

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

Bains Mer Monaco  vs.  Cerinnov Group SA

Bains Mer Monaco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bains Mer Monaco 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.

Cerinnov Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerinnov Group SA 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 Bains Mer and Cerinnov Group

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

The idea behind Bains Mer Monaco and Cerinnov Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.