Correlation Between Balyo SA and Glob Bioenergi

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

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

Diversification Opportunities for Balyo SA and Glob Bioenergi

0.74

Correlation Coefficient

Balyo SA  Glob Bioenergi

Poor diversification

The 3 months correlation between Balyo and Glob is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Balyo SA and Glob Bioenergi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glob Bioenergi and Balyo SA 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 Balyo SA are associated (or correlated) with Glob Bioenergi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glob Bioenergi has no effect on the direction of Balyo SA i.e., Balyo SA and Glob Bioenergi go up and down completely randomly.

Pair Corralation between Balyo SA and Glob Bioenergi

Assuming the 90 days trading horizon Balyo SA is expected to under-perform the Glob Bioenergi. But the stock apears to be less risky and, when comparing its historical volatility, Balyo SA is 3.4 times less risky than Glob Bioenergi. The stock trades about -0.13 of its potential returns per unit of risk. The Glob Bioenergi is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Glob Bioenergi on September 27, 2024 and sell it today you would lose (57.00) from holding Glob Bioenergi or give up 40.14% of portfolio value over 90 days.

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

Balyo SA  vs.  Glob Bioenergi

Balyo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balyo 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.

Glob Bioenergi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Balyo SA and Glob Bioenergi

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

The idea behind Balyo SA and Glob Bioenergi 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.