Correlation Between Sword Group and SQLI SA
Can any of the company-specific risk be diversified away by investing in both Sword Group and SQLI SA 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 Sword Group and SQLI SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sword Group SE and SQLI SA, you can compare the effects of market volatilities on Sword Group and SQLI SA 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 Sword Group with a short position of SQLI SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sword Group and SQLI SA.
Diversification Opportunities for Sword Group and SQLI SA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sword and SQLI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sword Group SE and SQLI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQLI SA and Sword Group 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 Sword Group SE are associated (or correlated) with SQLI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQLI SA has no effect on the direction of Sword Group i.e., Sword Group and SQLI SA go up and down completely randomly.
Pair Corralation between Sword Group and SQLI SA
Assuming the 90 days trading horizon Sword Group is expected to generate 2.2 times less return on investment than SQLI SA. But when comparing it to its historical volatility, Sword Group SE is 2.27 times less risky than SQLI SA. It trades about 0.11 of its potential returns per unit of risk. SQLI SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,140 in SQLI SA on August 25, 2024 and sell it today you would earn a total of 1,260 from holding SQLI SA or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sword Group SE vs. SQLI SA
Performance |
| Timeline |
| Sword Group SE |
| SQLI SA |
Sword Group and SQLI SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sword Group and SQLI SA
The main advantage of trading using opposite Sword Group and SQLI SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sword Group position performs unexpectedly, SQLI SA 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 SQLI SA will offset losses from the drop in SQLI SA's long position.| Sword Group vs. Linedata Services SA | Sword Group vs. Interparfums SA | Sword Group vs. Esker SA | Sword Group vs. Neurones |
| SQLI SA vs. Sword Group SE | SQLI SA vs. Neurones | SQLI SA vs. Sopra Steria Group | SQLI SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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