Correlation Between Air France and Sartorius Stedim
Can any of the company-specific risk be diversified away by investing in both Air France and Sartorius Stedim 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 Air France and Sartorius Stedim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM SA and Sartorius Stedim Biotech, you can compare the effects of market volatilities on Air France and Sartorius Stedim 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 Air France with a short position of Sartorius Stedim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Sartorius Stedim.
Diversification Opportunities for Air France and Sartorius Stedim
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Sartorius is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech and Air France 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 Air France KLM SA are associated (or correlated) with Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of Air France i.e., Air France and Sartorius Stedim go up and down completely randomly.
Pair Corralation between Air France and Sartorius Stedim
Assuming the 90 days horizon Air France is expected to generate 1.94 times less return on investment than Sartorius Stedim. But when comparing it to its historical volatility, Air France KLM SA is 1.19 times less risky than Sartorius Stedim. It trades about 0.05 of its potential returns per unit of risk. Sartorius Stedim Biotech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 18,560 in Sartorius Stedim Biotech on September 13, 2024 and sell it today you would earn a total of 715.00 from holding Sartorius Stedim Biotech or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM SA vs. Sartorius Stedim Biotech
Performance |
| Timeline |
| Air France KLM |
| Sartorius Stedim Biotech |
Air France and Sartorius Stedim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Sartorius Stedim
The main advantage of trading using opposite Air France and Sartorius Stedim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Sartorius Stedim 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 Sartorius Stedim will offset losses from the drop in Sartorius Stedim's long position.The idea behind Air France KLM SA and Sartorius Stedim Biotech 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.| Sartorius Stedim vs. Eurofins Scientific SE | Sartorius Stedim vs. Teleperformance SE | Sartorius Stedim vs. Biomerieux SA | Sartorius Stedim vs. Dassault Systemes SE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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