Correlation Between Stef SA and VIEL Cie
Can any of the company-specific risk be diversified away by investing in both Stef SA and VIEL Cie 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 VIEL Cie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and VIEL Cie socit, you can compare the effects of market volatilities on Stef SA and VIEL Cie 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 VIEL Cie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and VIEL Cie.
Diversification Opportunities for Stef SA and VIEL Cie
Excellent diversification
The 3 months correlation between Stef and VIEL is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and VIEL Cie socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIEL Cie socit 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 VIEL Cie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIEL Cie socit has no effect on the direction of Stef SA i.e., Stef SA and VIEL Cie go up and down completely randomly.
Pair Corralation between Stef SA and VIEL Cie
Assuming the 90 days trading horizon Stef SA is expected to generate 1.28 times less return on investment than VIEL Cie. In addition to that, Stef SA is 1.13 times more volatile than VIEL Cie socit. It trades about 0.07 of its total potential returns per unit of risk. VIEL Cie socit is currently generating about 0.11 per unit of volatility. If you would invest 548.00 in VIEL Cie socit on August 25, 2024 and sell it today you would earn a total of 552.00 from holding VIEL Cie socit or generate 100.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stef SA vs. VIEL Cie socit
Performance |
| Timeline |
| Stef SA |
| VIEL Cie socit |
Stef SA and VIEL Cie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and VIEL Cie
The main advantage of trading using opposite Stef SA and VIEL Cie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, VIEL Cie 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 VIEL Cie will offset losses from the drop in VIEL Cie's long position.The idea behind Stef SA and VIEL Cie socit 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.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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