Correlation Between Saint Jean and Savencia

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

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

Diversification Opportunities for Saint Jean and Savencia

-0.18

Correlation Coefficient

Saint Jean  Savencia

Good diversification

The 3 months correlation between Saint and Savencia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Saint Jean Groupe and Savencia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savencia SA and Saint Jean 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 Saint Jean Groupe are associated (or correlated) with Savencia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savencia SA has no effect on the direction of Saint Jean i.e., Saint Jean and Savencia go up and down completely randomly.

Pair Corralation between Saint Jean and Savencia

Assuming the 90 days trading horizon Saint Jean is expected to generate 1.78 times less return on investment than Savencia. In addition to that, Saint Jean is 1.2 times more volatile than Savencia SA. It trades about 0.02 of its total potential returns per unit of risk. Savencia SA is currently generating about 0.05 per unit of volatility. If you would invest  5,040  in Savencia SA on September 5, 2024 and sell it today you would earn a total of  180.00  from holding Savencia SA or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Saint Jean Groupe  vs.  Savencia SA

Saint Jean Groupe

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Saint Jean Groupe are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Saint Jean is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Savencia SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Savencia SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Savencia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saint Jean and Savencia

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

The idea behind Saint Jean Groupe and Savencia 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.