Correlation Between Sartorius Stedim and ESSILORLUXOTTICA

Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Sartorius Stedim and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and ESSILORLUXOTTICA.

Diversification Opportunities for Sartorius Stedim and ESSILORLUXOTTICA

-0.13

Correlation Coefficient

Sartorius Stedim  ESSILORLUXOTTICA

Good diversification

The 3 months correlation between Sartorius and ESSILORLUXOTTICA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and ESSILORLUXOTTICA go up and down completely randomly.

Pair Corralation between Sartorius Stedim and ESSILORLUXOTTICA

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to under-perform the ESSILORLUXOTTICA. In addition to that, Sartorius Stedim is 2.22 times more volatile than ESSILORLUXOTTICA 12ON. It trades about -0.02 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.06 per unit of volatility. If you would invest  8,114  in ESSILORLUXOTTICA 12ON on September 24, 2024 and sell it today you would earn a total of  3,286  from holding ESSILORLUXOTTICA 12ON or generate 40.5% return on investment over 90 days.

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

Sartorius Stedim Biotech  vs.  ESSILORLUXOTTICA 12ON

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. Despite nearly fragile basic indicators, Sartorius Stedim may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, ESSILORLUXOTTICA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sartorius Stedim and ESSILORLUXOTTICA

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

The idea behind Sartorius Stedim Biotech and ESSILORLUXOTTICA 12ON 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.