Correlation Between Sensorion and Valbiotis SAS

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

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

Diversification Opportunities for Sensorion and Valbiotis SAS

0.07

Correlation Coefficient

Sensorion  Valbiotis SAS

Significant diversification

The 3 months correlation between Sensorion and Valbiotis is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sensorion SA and Valbiotis SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valbiotis SAS and Sensorion 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 Sensorion SA are associated (or correlated) with Valbiotis SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valbiotis SAS has no effect on the direction of Sensorion i.e., Sensorion and Valbiotis SAS go up and down completely randomly.

Pair Corralation between Sensorion and Valbiotis SAS

Assuming the 90 days trading horizon Sensorion is expected to generate 17.36 times less return on investment than Valbiotis SAS. But when comparing it to its historical volatility, Sensorion SA is 1.84 times less risky than Valbiotis SAS. It trades about 0.01 of its potential returns per unit of risk. Valbiotis SAS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Valbiotis SAS on September 25, 2024 and sell it today you would earn a total of  13.00  from holding Valbiotis SAS or generate 10.48% return on investment over 90 days.

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

Sensorion SA  vs.  Valbiotis SAS

Sensorion SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensorion SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Valbiotis SAS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valbiotis SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Valbiotis SAS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sensorion and Valbiotis SAS

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

The idea behind Sensorion SA and Valbiotis SAS 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..