Correlation Between Vicat SA and Stef SA

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

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

Diversification Opportunities for Vicat SA and Stef SA

-0.64

Correlation Coefficient

Vicat SA  Stef SA

Excellent diversification

The 3 months correlation between Vicat and Stef is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Stef SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stef SA 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 Stef SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stef SA has no effect on the direction of Vicat SA i.e., Vicat SA and Stef SA go up and down completely randomly.

Pair Corralation between Vicat SA and Stef SA

Assuming the 90 days trading horizon Vicat SA is expected to generate 1.2 times more return on investment than Stef SA. However, Vicat SA is 1.2 times more volatile than Stef SA. It trades about 0.12 of its potential returns per unit of risk. Stef SA is currently generating about -0.11 per unit of risk. If you would invest  3,155  in Vicat SA on August 31, 2024 and sell it today you would earn a total of  440.00  from holding Vicat SA or generate 13.95% return on investment over 90 days.

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

Vicat SA  vs.  Stef SA

Vicat SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Stef SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stef SA 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 Vicat SA and Stef SA

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

The idea behind Vicat SA and Stef 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.