Correlation Between Safran SA and Accor S
Can any of the company-specific risk be diversified away by investing in both Safran SA and Accor S 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 Safran SA and Accor S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Accor S A, you can compare the effects of market volatilities on Safran SA and Accor S 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 Safran SA with a short position of Accor S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Accor S.
Diversification Opportunities for Safran SA and Accor S
Very poor diversification
The 3 months correlation between Safran and Accor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Accor S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor S A and Safran SA 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 Safran SA are associated (or correlated) with Accor S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor S A has no effect on the direction of Safran SA i.e., Safran SA and Accor S go up and down completely randomly.
Pair Corralation between Safran SA and Accor S
Assuming the 90 days trading horizon Safran SA is expected to generate 0.96 times more return on investment than Accor S. However, Safran SA is 1.04 times less risky than Accor S. It trades about 0.2 of its potential returns per unit of risk. Accor S A is currently generating about 0.15 per unit of risk. If you would invest 20,780 in Safran SA on September 1, 2024 and sell it today you would earn a total of 1,270 from holding Safran SA or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. Accor S A
Performance |
| Timeline |
| Safran SA |
| Accor S A |
Safran SA and Accor S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Accor S
The main advantage of trading using opposite Safran SA and Accor S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Accor S 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 Accor S will offset losses from the drop in Accor S's long position.| Safran SA vs. Thales SA | Safran SA vs. Vinci SA | Safran SA vs. Air Liquide SA | Safran SA vs. Dassault Systemes SE |
| Accor S vs. Les Hotels Bav | Accor S vs. Groupe Partouche SA | Accor S vs. Centrale dAchat Franaise | Accor S vs. Manitou BF SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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