Correlation Between Societe Generale and Sergeferrari

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

By analyzing existing cross correlation between Societe Generale SA and Sergeferrari G, you can compare the effects of market volatilities on Societe Generale and Sergeferrari 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 Societe Generale with a short position of Sergeferrari. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Sergeferrari.

Diversification Opportunities for Societe Generale and Sergeferrari

0.74

Correlation Coefficient

Societe Generale  Sergeferrari

Poor diversification

The 3 months correlation between Societe and Sergeferrari is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale SA and Sergeferrari G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sergeferrari G and Societe Generale 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 Societe Generale SA are associated (or correlated) with Sergeferrari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sergeferrari G has no effect on the direction of Societe Generale i.e., Societe Generale and Sergeferrari go up and down completely randomly.

Pair Corralation between Societe Generale and Sergeferrari

Assuming the 90 days trading horizon Societe Generale SA is expected to generate 1.1 times more return on investment than Sergeferrari. However, Societe Generale is 1.1 times more volatile than Sergeferrari G. It trades about 0.15 of its potential returns per unit of risk. Sergeferrari G is currently generating about 0.0 per unit of risk. If you would invest  2,211  in Societe Generale SA on September 12, 2024 and sell it today you would earn a total of  457.00  from holding Societe Generale SA or generate 20.67% return on investment over 90 days.

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

Societe Generale SA  vs.  Sergeferrari G

Societe Generale

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Societe Generale SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Societe Generale sustained solid returns over the last few months and may actually be approaching a breakup point.

Sergeferrari G

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sergeferrari G has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Sergeferrari is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Societe Generale and Sergeferrari

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

The idea behind Societe Generale SA and Sergeferrari G 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.