Correlation Between Arkema SA and Sartorius Stedim

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

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

Diversification Opportunities for Arkema SA and Sartorius Stedim

0.36

Correlation Coefficient

Arkema SA  Sartorius Stedim

Weak diversification

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

Pair Corralation between Arkema SA and Sartorius Stedim

Assuming the 90 days trading horizon Arkema SA is expected to under-perform the Sartorius Stedim. But the stock apears to be less risky and, when comparing its historical volatility, Arkema SA is 1.7 times less risky than Sartorius Stedim. The stock trades about -0.09 of its potential returns per unit of risk. The Sartorius Stedim Biotech is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  17,375  in Sartorius Stedim Biotech on September 1, 2024 and sell it today you would earn a total of  660.00  from holding Sartorius Stedim Biotech or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Arkema SA  vs.  Sartorius Stedim Biotech

Arkema SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkema 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.

Sartorius Stedim Biotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Sartorius Stedim may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Arkema SA and Sartorius Stedim

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

The idea behind Arkema SA and Sartorius Stedim Biotech 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.