Correlation Between Sartorius Stedim and Litigation Capital

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Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Sartorius Stedim and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and Litigation Capital.

Diversification Opportunities for Sartorius Stedim and Litigation Capital

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sartorius and Litigation is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Litigation Capital go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Litigation Capital

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 1.97 times more return on investment than Litigation Capital. However, Sartorius Stedim is 1.97 times more volatile than Litigation Capital Management. It trades about 0.02 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.15 per unit of risk. If you would invest  17,972  in Sartorius Stedim Biotech on October 8, 2024 and sell it today you would earn a total of  58.00  from holding Sartorius Stedim Biotech or generate 0.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sartorius Stedim Biotech  vs.  Litigation Capital Management

 Performance 
       Timeline  
Sartorius Stedim Biotech 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sartorius Stedim is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Litigation Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Litigation Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sartorius Stedim and Litigation Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sartorius Stedim and Litigation Capital

The main advantage of trading using opposite Sartorius Stedim and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sartorius Stedim position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.
The idea behind Sartorius Stedim Biotech and Litigation Capital Management 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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