Correlation Between Stef SA and Bourse Direct
Can any of the company-specific risk be diversified away by investing in both Stef SA and Bourse Direct 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 Bourse Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and Bourse Direct SA, you can compare the effects of market volatilities on Stef SA and Bourse Direct 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 Bourse Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and Bourse Direct.
Diversification Opportunities for Stef SA and Bourse Direct
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stef and Bourse is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct SA 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 Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Stef SA i.e., Stef SA and Bourse Direct go up and down completely randomly.
Pair Corralation between Stef SA and Bourse Direct
Assuming the 90 days trading horizon Stef SA is expected to generate 0.8 times more return on investment than Bourse Direct. However, Stef SA is 1.24 times less risky than Bourse Direct. It trades about 0.07 of its potential returns per unit of risk. Bourse Direct SA is currently generating about 0.04 per unit of risk. If you would invest 7,866 in Stef SA on August 29, 2024 and sell it today you would earn a total of 5,294 from holding Stef SA or generate 67.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stef SA vs. Bourse Direct SA
Performance |
| Timeline |
| Stef SA |
| Bourse Direct SA |
Stef SA and Bourse Direct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and Bourse Direct
The main advantage of trading using opposite Stef SA and Bourse Direct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, Bourse Direct 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 Bourse Direct will offset losses from the drop in Bourse Direct's long position.The idea behind Stef SA and Bourse Direct 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.| Bourse Direct vs. BigBen Interactive | Bourse Direct vs. ABC arbitrage SA | Bourse Direct vs. CBO Territoria SA | Bourse Direct vs. Aurea 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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