Correlation Between Stef SA and Sword Group
Can any of the company-specific risk be diversified away by investing in both Stef SA and Sword Group 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 Sword Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and Sword Group SE, you can compare the effects of market volatilities on Stef SA and Sword Group 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 Sword Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and Sword Group.
Diversification Opportunities for Stef SA and Sword Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stef and Sword is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Sword Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sword Group SE 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 Sword Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sword Group SE has no effect on the direction of Stef SA i.e., Stef SA and Sword Group go up and down completely randomly.
Pair Corralation between Stef SA and Sword Group
Assuming the 90 days trading horizon Stef SA is expected to generate 0.51 times more return on investment than Sword Group. However, Stef SA is 1.96 times less risky than Sword Group. It trades about 0.42 of its potential returns per unit of risk. Sword Group SE is currently generating about -0.08 per unit of risk. If you would invest 13,360 in Stef SA on November 27, 2024 and sell it today you would earn a total of 640.00 from holding Stef SA or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stef SA vs. Sword Group SE
Performance |
| Timeline |
| Stef SA |
| Sword Group SE |
Stef SA and Sword Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and Sword Group
The main advantage of trading using opposite Stef SA and Sword Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, Sword Group 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 Sword Group will offset losses from the drop in Sword Group's long position.The idea behind Stef SA and Sword Group SE 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.| Sword Group vs. Aubay Socit Anonyme | Sword Group vs. Neurones | Sword Group vs. Rubis SCA | Sword Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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