Correlation Between Stef SA and TronicS Microsystems
Can any of the company-specific risk be diversified away by investing in both Stef SA and TronicS Microsystems 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 Stef SA and TronicS Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and TronicS Microsystems SA, you can compare the effects of market volatilities on Stef SA and TronicS Microsystems 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 Stef SA with a short position of TronicS Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and TronicS Microsystems.
Diversification Opportunities for Stef SA and TronicS Microsystems
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stef and TronicS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and TronicS Microsystems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TronicS Microsystems and Stef 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 Stef SA are associated (or correlated) with TronicS Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TronicS Microsystems has no effect on the direction of Stef SA i.e., Stef SA and TronicS Microsystems go up and down completely randomly.
Pair Corralation between Stef SA and TronicS Microsystems
Assuming the 90 days trading horizon Stef SA is expected to generate 2.27 times less return on investment than TronicS Microsystems. But when comparing it to its historical volatility, Stef SA is 4.22 times less risky than TronicS Microsystems. It trades about 0.07 of its potential returns per unit of risk. TronicS Microsystems SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 320.00 in TronicS Microsystems SA on September 14, 2024 and sell it today you would earn a total of 26.00 from holding TronicS Microsystems SA or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Stef SA vs. TronicS Microsystems SA
Performance |
| Timeline |
| Stef SA |
| TronicS Microsystems |
Stef SA and TronicS Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and TronicS Microsystems
The main advantage of trading using opposite Stef SA and TronicS Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, TronicS Microsystems 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 TronicS Microsystems will offset losses from the drop in TronicS Microsystems' long position.The idea behind Stef SA and TronicS Microsystems 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.| TronicS Microsystems vs. Groupe Guillin SA | TronicS Microsystems vs. Stef SA | TronicS Microsystems vs. SA Catana Group | TronicS Microsystems vs. Jacquet Metal Service |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |