Correlation Between Bureau Veritas and Imerys SA

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

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

Diversification Opportunities for Bureau Veritas and Imerys SA

-0.05

Correlation Coefficient

Bureau Veritas  Imerys SA

Good diversification

The 3 months correlation between Bureau and Imerys is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Imerys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imerys SA and Bureau Veritas 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 Bureau Veritas SA are associated (or correlated) with Imerys SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imerys SA has no effect on the direction of Bureau Veritas i.e., Bureau Veritas and Imerys SA go up and down completely randomly.

Pair Corralation between Bureau Veritas and Imerys SA

Assuming the 90 days trading horizon Bureau Veritas SA is expected to under-perform the Imerys SA. But the stock apears to be less risky and, when comparing its historical volatility, Bureau Veritas SA is 1.95 times less risky than Imerys SA. The stock trades about 0.0 of its potential returns per unit of risk. The Imerys SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,890  in Imerys SA on September 12, 2024 and sell it today you would lose (20.00) from holding Imerys SA or give up 0.69% of portfolio value over 90 days.

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

Bureau Veritas SA  vs.  Imerys SA

Bureau Veritas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bureau Veritas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Bureau Veritas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Imerys SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imerys SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Imerys SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bureau Veritas and Imerys SA

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

The idea behind Bureau Veritas SA and Imerys 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.