Correlation Between Stef SA and Groupe CRIT
Can any of the company-specific risk be diversified away by investing in both Stef SA and Groupe CRIT 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 Groupe CRIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and Groupe CRIT SA, you can compare the effects of market volatilities on Stef SA and Groupe CRIT 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 Groupe CRIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and Groupe CRIT.
Diversification Opportunities for Stef SA and Groupe CRIT
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stef and Groupe is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Groupe CRIT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe CRIT 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 Groupe CRIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe CRIT SA has no effect on the direction of Stef SA i.e., Stef SA and Groupe CRIT go up and down completely randomly.
Pair Corralation between Stef SA and Groupe CRIT
Assuming the 90 days trading horizon Stef SA is expected to generate 0.53 times more return on investment than Groupe CRIT. However, Stef SA is 1.87 times less risky than Groupe CRIT. It trades about -0.25 of its potential returns per unit of risk. Groupe CRIT SA is currently generating about -0.34 per unit of risk. If you would invest 13,740 in Stef SA on September 1, 2024 and sell it today you would lose (740.00) from holding Stef SA or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stef SA vs. Groupe CRIT SA
Performance |
| Timeline |
| Stef SA |
| Groupe CRIT SA |
Stef SA and Groupe CRIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and Groupe CRIT
The main advantage of trading using opposite Stef SA and Groupe CRIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, Groupe CRIT 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 Groupe CRIT will offset losses from the drop in Groupe CRIT's long position.The idea behind Stef SA and Groupe CRIT 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.| Groupe CRIT vs. Synergie SE | Groupe CRIT vs. Alten SA | Groupe CRIT vs. Manitou BF SA | Groupe CRIT vs. Linedata Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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