Correlation Between Sartorius Stedim and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim and Veolia Environnement 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 Sartorius Stedim and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sartorius Stedim Biotech and Veolia Environnement VE, you can compare the effects of market volatilities on Sartorius Stedim and Veolia Environnement 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 Sartorius Stedim with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and Veolia Environnement.

Diversification Opportunities for Sartorius Stedim and Veolia Environnement

0.36

Correlation Coefficient

Sartorius Stedim  Veolia Environnement

Weak diversification

The 3 months correlation between Sartorius and Veolia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Sartorius Stedim 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 Sartorius Stedim Biotech are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Veolia Environnement go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Veolia Environnement

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 1.83 times more return on investment than Veolia Environnement. However, Sartorius Stedim is 1.83 times more volatile than Veolia Environnement VE. It trades about 0.07 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.04 per unit of risk. If you would invest  18,000  in Sartorius Stedim Biotech on September 28, 2024 and sell it today you would earn a total of  430.00  from holding Sartorius Stedim Biotech or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sartorius Stedim Biotech  vs.  Veolia Environnement VE

Sartorius Stedim Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Stedim Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Sartorius Stedim is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sartorius Stedim and Veolia Environnement

The main advantage of trading using opposite Sartorius Stedim and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sartorius Stedim position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.

The idea behind Sartorius Stedim Biotech and Veolia Environnement VE 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.