Correlation Between Safran SA and Tat Techno
Can any of the company-specific risk be diversified away by investing in both Safran SA and Tat Techno 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 Tat Techno into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Tat Techno, you can compare the effects of market volatilities on Safran SA and Tat Techno 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 Tat Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Tat Techno.
Diversification Opportunities for Safran SA and Tat Techno
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Safran and Tat is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Tat Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tat Techno 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 Tat Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tat Techno has no effect on the direction of Safran SA i.e., Safran SA and Tat Techno go up and down completely randomly.
Pair Corralation between Safran SA and Tat Techno
Assuming the 90 days horizon Safran SA is expected to generate 13.19 times less return on investment than Tat Techno. But when comparing it to its historical volatility, Safran SA is 2.89 times less risky than Tat Techno. It trades about 0.05 of its potential returns per unit of risk. Tat Techno is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,837 in Tat Techno on August 25, 2024 and sell it today you would earn a total of 386.00 from holding Tat Techno or generate 21.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safran SA vs. Tat Techno
Performance |
| Timeline |
| Safran SA |
| Tat Techno |
Safran SA and Tat Techno Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Tat Techno
The main advantage of trading using opposite Safran SA and Tat Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Tat Techno 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 Tat Techno will offset losses from the drop in Tat Techno's long position.| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
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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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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