Correlation Between Valens and SGS SA
Can any of the company-specific risk be diversified away by investing in both Valens and SGS 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 Valens and SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and SGS SA, you can compare the effects of market volatilities on Valens and SGS 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 Valens with a short position of SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and SGS SA.
Diversification Opportunities for Valens and SGS SA
Weak diversification
The 3 months correlation between Valens and SGS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Valens and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Valens 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 Valens are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Valens i.e., Valens and SGS SA go up and down completely randomly.
Pair Corralation between Valens and SGS SA
Considering the 90-day investment horizon Valens is expected to generate 5.57 times more return on investment than SGS SA. However, Valens is 5.57 times more volatile than SGS SA. It trades about 0.09 of its potential returns per unit of risk. SGS SA is currently generating about -0.04 per unit of risk. If you would invest 187.00 in Valens on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Valens or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Valens vs. SGS SA
Performance |
| Timeline |
| Valens |
| SGS SA |
Valens and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and SGS SA
The main advantage of trading using opposite Valens and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, SGS 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 SGS SA will offset losses from the drop in SGS SA's long position.| Valens vs. NVIDIA | Valens vs. Taiwan Semiconductor Manufacturing | Valens vs. Micron Technology | Valens vs. Qualcomm Incorporated |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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