Correlation Between Vicat SA and Safe Orthopaedics

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

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

Diversification Opportunities for Vicat SA and Safe Orthopaedics

-0.6

Correlation Coefficient

Vicat SA  Safe Orthopaedics

Excellent diversification

The 3 months correlation between Vicat and Safe is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Safe Orthopaedics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Orthopaedics and Vicat 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 Vicat SA are associated (or correlated) with Safe Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Orthopaedics has no effect on the direction of Vicat SA i.e., Vicat SA and Safe Orthopaedics go up and down completely randomly.

Pair Corralation between Vicat SA and Safe Orthopaedics

Assuming the 90 days trading horizon Vicat SA is expected to generate 0.1 times more return on investment than Safe Orthopaedics. However, Vicat SA is 9.7 times less risky than Safe Orthopaedics. It trades about 0.07 of its potential returns per unit of risk. Safe Orthopaedics SA is currently generating about -0.13 per unit of risk. If you would invest  3,375  in Vicat SA on September 24, 2024 and sell it today you would earn a total of  215.00  from holding Vicat SA or generate 6.37% return on investment over 90 days.

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

Vicat SA  vs.  Safe Orthopaedics SA

Vicat SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Safe Orthopaedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Orthopaedics SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vicat SA and Safe Orthopaedics

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

The idea behind Vicat SA and Safe Orthopaedics 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 Global Correlations module to find global opportunities by holding instruments from different markets.