Correlation Between SGS SA and Stepstone

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

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

Diversification Opportunities for SGS SA and Stepstone

-0.79

Correlation Coefficient

SGS SA  Stepstone

Pay attention - limited upside

The 3 months correlation between SGS and Stepstone is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and SGS SA 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 SGS SA are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of SGS SA i.e., SGS SA and Stepstone go up and down completely randomly.

Pair Corralation between SGS SA and Stepstone

Assuming the 90 days horizon SGS SA is expected to under-perform the Stepstone. But the pink sheet apears to be less risky and, when comparing its historical volatility, SGS SA is 1.83 times less risky than Stepstone. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Stepstone Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,601  in Stepstone Group on September 20, 2024 and sell it today you would earn a total of  127.00  from holding Stepstone Group or generate 2.27% return on investment over 90 days.

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

SGS SA  vs.  Stepstone Group

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Stepstone Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone 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 SGS SA and Stepstone

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

The idea behind SGS SA and Stepstone Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.