Correlation Between BNP Paribas and COMINTL BANK

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

By analyzing existing cross correlation between BNP Paribas SA and COMINTL BANK ADR1, you can compare the effects of market volatilities on BNP Paribas and COMINTL BANK 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 BNP Paribas with a short position of COMINTL BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and COMINTL BANK.

Diversification Opportunities for BNP Paribas and COMINTL BANK

-0.29

Correlation Coefficient

BNP Paribas  COMINTL BANK

Very good diversification

The 3 months correlation between BNP and COMINTL is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and COMINTL BANK ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMINTL BANK ADR1 and BNP Paribas 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 BNP Paribas SA are associated (or correlated) with COMINTL BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMINTL BANK ADR1 has no effect on the direction of BNP Paribas i.e., BNP Paribas and COMINTL BANK go up and down completely randomly.

Pair Corralation between BNP Paribas and COMINTL BANK

Assuming the 90 days trading horizon BNP Paribas SA is expected to under-perform the COMINTL BANK. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.42 times less risky than COMINTL BANK. The stock trades about -0.09 of its potential returns per unit of risk. The COMINTL BANK ADR1 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  131.00  in COMINTL BANK ADR1 on September 22, 2024 and sell it today you would earn a total of  0.00  from holding COMINTL BANK ADR1 or generate 0.0% return on investment over 90 days.

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

BNP Paribas SA  vs.  COMINTL BANK ADR1

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

COMINTL BANK ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMINTL BANK ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COMINTL BANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BNP Paribas and COMINTL BANK

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

The idea behind BNP Paribas SA and COMINTL BANK ADR1 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.