Correlation Between Stef SA and ID Logistics
Can any of the company-specific risk be diversified away by investing in both Stef SA and ID Logistics 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 ID Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and ID Logistics Group, you can compare the effects of market volatilities on Stef SA and ID Logistics 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 ID Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and ID Logistics.
Diversification Opportunities for Stef SA and ID Logistics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stef and IDL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and ID Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ID Logistics Group 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 ID Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ID Logistics Group has no effect on the direction of Stef SA i.e., Stef SA and ID Logistics go up and down completely randomly.
Pair Corralation between Stef SA and ID Logistics
Assuming the 90 days trading horizon Stef SA is expected to generate 3.98 times less return on investment than ID Logistics. But when comparing it to its historical volatility, Stef SA is 1.44 times less risky than ID Logistics. It trades about 0.08 of its potential returns per unit of risk. ID Logistics Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 37,200 in ID Logistics Group on November 3, 2024 and sell it today you would earn a total of 3,250 from holding ID Logistics Group or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Stef SA vs. ID Logistics Group
Performance |
| Timeline |
| Stef SA |
| ID Logistics Group |
Stef SA and ID Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and ID Logistics
The main advantage of trading using opposite Stef SA and ID Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, ID Logistics 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 ID Logistics will offset losses from the drop in ID Logistics' long position.The idea behind Stef SA and ID Logistics Group 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.| ID Logistics vs. Interparfums SA | ID Logistics vs. Stef SA | ID Logistics vs. Virbac SA | ID Logistics vs. Esker 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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