Correlation Between Bastide Le and Fountaine Pajo

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

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

Diversification Opportunities for Bastide Le and Fountaine Pajo

-0.12

Correlation Coefficient

Bastide Le  Fountaine Pajo

Good diversification

The 3 months correlation between Bastide and Fountaine is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bastide Le Confort and Fountaine Pajo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountaine Pajo and Bastide Le 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 Bastide Le Confort are associated (or correlated) with Fountaine Pajo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountaine Pajo has no effect on the direction of Bastide Le i.e., Bastide Le and Fountaine Pajo go up and down completely randomly.

Pair Corralation between Bastide Le and Fountaine Pajo

Assuming the 90 days trading horizon Bastide Le Confort is expected to generate 1.58 times more return on investment than Fountaine Pajo. However, Bastide Le is 1.58 times more volatile than Fountaine Pajo. It trades about 0.05 of its potential returns per unit of risk. Fountaine Pajo is currently generating about -0.02 per unit of risk. If you would invest  2,055  in Bastide Le Confort on September 12, 2024 and sell it today you would earn a total of  120.00  from holding Bastide Le Confort or generate 5.84% return on investment over 90 days.

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

Bastide Le Confort  vs.  Fountaine Pajo

Bastide Le Confort

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bastide Le Confort are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bastide Le may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fountaine Pajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountaine Pajo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fountaine Pajo 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 Bastide Le and Fountaine Pajo

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

The idea behind Bastide Le Confort and Fountaine Pajo 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.