Correlation Between GEE and BNP Paribas

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Can any of the company-specific risk be diversified away by investing in both GEE and BNP Paribas 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 GEE and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEE Group and BNP Paribas SA, you can compare the effects of market volatilities on GEE and BNP Paribas 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 GEE with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEE and BNP Paribas.

Diversification Opportunities for GEE and BNP Paribas

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between GEE and BNPQF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GEE Group and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and GEE 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 GEE Group are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of GEE i.e., GEE and BNP Paribas go up and down completely randomly.

Pair Corralation between GEE and BNP Paribas

Considering the 90-day investment horizon GEE Group is expected to generate 1.35 times more return on investment than BNP Paribas. However, GEE is 1.35 times more volatile than BNP Paribas SA. It trades about 0.42 of its potential returns per unit of risk. BNP Paribas SA is currently generating about 0.47 per unit of risk. If you would invest  65.00  in GEE Group on September 3, 2022 and sell it today you would earn a total of  14.00  from holding GEE Group or generate 21.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

GEE Group  vs.  BNP Paribas SA

 Performance (%) 
       Timeline  
GEE Group 
GEE Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in GEE Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, GEE may actually be approaching a critical reversion point that can send shares even higher in January 2023.

GEE Price Channel

BNP Paribas SA 
BNPQF Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BNP Paribas exhibited solid returns over the last few months and may actually be approaching a breakup point.

BNPQF Price Channel

GEE and BNP Paribas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GEE and BNP Paribas

The main advantage of trading using opposite GEE and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEE position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.
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The idea behind GEE Group and BNP Paribas 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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