Correlation Between Chia and Safran SA
Can any of the company-specific risk be diversified away by investing in both Chia and Safran 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 Chia and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and Safran SA, you can compare the effects of market volatilities on Chia and Safran 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 Chia with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Safran SA.
Diversification Opportunities for Chia and Safran SA
Excellent diversification
The 3 months correlation between Chia and Safran is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Chia 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 Chia are associated (or correlated) with Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Chia i.e., Chia and Safran SA go up and down completely randomly.
Pair Corralation between Chia and Safran SA
Assuming the 90 days trading horizon Chia is expected to under-perform the Safran SA. In addition to that, Chia is 3.11 times more volatile than Safran SA. It trades about -0.02 of its total potential returns per unit of risk. Safran SA is currently generating about 0.08 per unit of volatility. If you would invest 13,740 in Safran SA on November 2, 2024 and sell it today you would earn a total of 11,120 from holding Safran SA or generate 80.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 64.36% |
| Values | Daily Returns |
Chia vs. Safran SA
Performance |
| Timeline |
| Chia |
| Safran SA |
Chia and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and Safran SA
The main advantage of trading using opposite Chia and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, Safran 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 Safran SA will offset losses from the drop in Safran SA's long position.The idea behind Chia and Safran SA 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.| Safran SA vs. Thales SA ADR | Safran SA vs. MTU Aero Engines | Safran SA vs. Leonardo SpA ADR | Safran SA vs. Thales 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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