Correlation Between Banestes and Biomm SA

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

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

Diversification Opportunities for Banestes and Biomm SA

0.48

Correlation Coefficient

Banestes  Biomm SA

Very weak diversification

The 3 months correlation between Banestes and Biomm is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Banestes SA and Biomm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomm SA and Banestes 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 Banestes SA are associated (or correlated) with Biomm SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomm SA has no effect on the direction of Banestes i.e., Banestes and Biomm SA go up and down completely randomly.

Pair Corralation between Banestes and Biomm SA

Assuming the 90 days trading horizon Banestes SA is expected to under-perform the Biomm SA. But the stock apears to be less risky and, when comparing its historical volatility, Banestes SA is 3.31 times less risky than Biomm SA. The stock trades about -0.06 of its potential returns per unit of risk. The Biomm SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  971.00  in Biomm SA on October 1, 2024 and sell it today you would earn a total of  36.00  from holding Biomm SA or generate 3.71% return on investment over 90 days.

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

Banestes SA   vs.  Biomm SA

Banestes SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banestes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Banestes is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Biomm SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biomm SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Biomm SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Banestes and Biomm SA

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

The idea behind Banestes SA and Biomm 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.