Correlation Between SGS SA and Equifax
Can any of the company-specific risk be diversified away by investing in both SGS SA and Equifax 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 SGS SA and Equifax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGS SA and Equifax, you can compare the effects of market volatilities on SGS SA and Equifax 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 SGS SA with a short position of Equifax. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGS SA and Equifax.
Diversification Opportunities for SGS SA and Equifax
Very poor diversification
The 3 months correlation between SGS and Equifax is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and SGS 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 SGS SA are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of SGS SA i.e., SGS SA and Equifax go up and down completely randomly.
Pair Corralation between SGS SA and Equifax
Assuming the 90 days horizon SGS SA is expected to under-perform the Equifax. But the pink sheet apears to be less risky and, when comparing its historical volatility, SGS SA is 1.27 times less risky than Equifax. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Equifax is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 26,960 in Equifax on August 27, 2024 and sell it today you would lose (1,602) from holding Equifax or give up 5.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SGS SA vs. Equifax
Performance |
| Timeline |
| SGS SA |
| Equifax |
SGS SA and Equifax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGS SA and Equifax
The main advantage of trading using opposite SGS SA and Equifax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGS SA position performs unexpectedly, Equifax 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 Equifax will offset losses from the drop in Equifax's long position.| SGS SA vs. Sack Lunch Productions | SGS SA vs. Potash America | SGS SA vs. Dalrada Financial Corp | SGS SA vs. TransUnion |
| Equifax vs. Verisk Analytics | Equifax vs. Exponent | Equifax vs. FTI Consulting | Equifax vs. Franklin Covey |
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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