Correlation Between NSE SA and Groupe Sfpi

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

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

Diversification Opportunities for NSE SA and Groupe Sfpi

0.11

Correlation Coefficient

NSE SA  Groupe Sfpi

Average diversification

The 3 months correlation between NSE and Groupe is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NSE SA and Groupe Sfpi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Sfpi and NSE 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 NSE SA are associated (or correlated) with Groupe Sfpi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Sfpi has no effect on the direction of NSE SA i.e., NSE SA and Groupe Sfpi go up and down completely randomly.

Pair Corralation between NSE SA and Groupe Sfpi

Assuming the 90 days trading horizon NSE SA is expected to under-perform the Groupe Sfpi. But the stock apears to be less risky and, when comparing its historical volatility, NSE SA is 1.37 times less risky than Groupe Sfpi. The stock trades about -0.07 of its potential returns per unit of risk. The Groupe Sfpi is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Groupe Sfpi on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Groupe Sfpi or generate 2.12% return on investment over 90 days.

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

NSE SA  vs.  Groupe Sfpi

NSE SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSE SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NSE SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Groupe Sfpi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Groupe Sfpi is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NSE SA and Groupe Sfpi

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

The idea behind NSE SA and Groupe Sfpi 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.