Correlation Between Sartorius Stedim and American Homes

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Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on Sartorius Stedim and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and American Homes.

Diversification Opportunities for Sartorius Stedim and American Homes

SartoriusAmericanDiversified AwaySartoriusAmericanDiversified Away100%
-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sartorius and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and American Homes go up and down completely randomly.

Pair Corralation between Sartorius Stedim and American Homes

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to under-perform the American Homes. In addition to that, Sartorius Stedim is 1.67 times more volatile than American Homes 4. It trades about -0.01 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.02 per unit of volatility. If you would invest  3,159  in American Homes 4 on October 27, 2024 and sell it today you would earn a total of  141.00  from holding American Homes 4 or generate 4.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sartorius Stedim Biotech  vs.  American Homes 4

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-15-10-505
JavaScript chart by amCharts 3.21.1556S1 A4XA
       Timeline  
Sartorius Stedim Biotech 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sartorius Stedim may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan165170175180185190195200205
American Homes 4 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3233343536

Sartorius Stedim and American Homes Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.67-4.99-3.32-1.650.01.673.355.026.7 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.1556S1 A4XA
       Returns  

Pair Trading with Sartorius Stedim and American Homes

The main advantage of trading using opposite Sartorius Stedim and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sartorius Stedim position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.
The idea behind Sartorius Stedim Biotech and American Homes 4 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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