Correlation Between Compagnie Industrielle and Bouygues

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

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

Diversification Opportunities for Compagnie Industrielle and Bouygues

-0.8

Correlation Coefficient

Compagnie Industrielle  Bouygues

Pay attention - limited upside

The 3 months correlation between Compagnie and Bouygues is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Industrielle et and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Compagnie Industrielle 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 Compagnie Industrielle et are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Compagnie Industrielle i.e., Compagnie Industrielle and Bouygues go up and down completely randomly.

Pair Corralation between Compagnie Industrielle and Bouygues

Assuming the 90 days trading horizon Compagnie Industrielle et is expected to generate 1.44 times more return on investment than Bouygues. However, Compagnie Industrielle is 1.44 times more volatile than Bouygues SA. It trades about 0.17 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.11 per unit of risk. If you would invest  5,050  in Compagnie Industrielle et on September 15, 2024 and sell it today you would earn a total of  1,050  from holding Compagnie Industrielle et or generate 20.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Compagnie Industrielle et  vs.  Bouygues SA

Compagnie Industrielle

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Industrielle et are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Industrielle sustained solid returns over the last few months and may actually be approaching a breakup point.

Bouygues SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bouygues SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie Industrielle and Bouygues

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

The idea behind Compagnie Industrielle et and Bouygues 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.