Correlation Between Sartorius Stedim and Alan Allman

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

Diversification Opportunities for Sartorius Stedim and Alan Allman

0.63

Correlation Coefficient

Sartorius Stedim  Alan Allman

Poor diversification

The 3 months correlation between Sartorius and Alan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Alan Allman Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alan Allman Associates 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 Alan Allman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alan Allman Associates has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Alan Allman go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Alan Allman

Assuming the 90 days trading horizon Sartorius Stedim is expected to generate 5.4 times less return on investment than Alan Allman. But when comparing it to its historical volatility, Sartorius Stedim Biotech is 3.8 times less risky than Alan Allman. It trades about 0.07 of its potential returns per unit of risk. Alan Allman Associates is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  478.00  in Alan Allman Associates on October 26, 2024 and sell it today you would earn a total of  187.00  from holding Alan Allman Associates or generate 39.12% return on investment over 90 days.

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

Sartorius Stedim Biotech  vs.  Alan Allman Associates

Sartorius Stedim Biotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 5 (%) 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 February 2025.

Alan Allman Associates

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alan Allman Associates are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alan Allman sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sartorius Stedim and Alan Allman

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

The idea behind Sartorius Stedim Biotech and Alan Allman Associates 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.