Correlation Between Sartorius Stedim and Life Science

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

By analyzing existing cross correlation between Sartorius Stedim Biotech and Life Science REIT, you can compare the effects of market volatilities on Sartorius Stedim and Life Science 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 Sartorius Stedim with a short position of Life Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and Life Science.

Diversification Opportunities for Sartorius Stedim and Life Science

0.1

Correlation Coefficient

Sartorius Stedim  Life Science

Average diversification

The 3 months correlation between Sartorius and Life is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Life Science REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Science REIT and Sartorius Stedim 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 Sartorius Stedim Biotech are associated (or correlated) with Life Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Science REIT has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Life Science go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Life Science

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 1.66 times more return on investment than Life Science. However, Sartorius Stedim is 1.66 times more volatile than Life Science REIT. It trades about -0.02 of its potential returns per unit of risk. Life Science REIT is currently generating about -0.05 per unit of risk. If you would invest  31,148  in Sartorius Stedim Biotech on October 11, 2024 and sell it today you would lose (11,418) from holding Sartorius Stedim Biotech or give up 36.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sartorius Stedim Biotech  vs.  Life Science REIT

Sartorius Stedim Biotech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sartorius Stedim may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Life Science REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Science REIT 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sartorius Stedim and Life Science

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

The idea behind Sartorius Stedim Biotech and Life Science REIT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.