Correlation Between Sartorius Stedim and Edenred SA

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

Diversification Opportunities for Sartorius Stedim and Edenred SA

0.73

Correlation Coefficient

Sartorius Stedim  Edenred SA

Poor diversification

The 3 months correlation between Sartorius and Edenred is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and Edenred SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred SA 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 Edenred SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred SA has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and Edenred SA go up and down completely randomly.

Pair Corralation between Sartorius Stedim and Edenred SA

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 1.11 times more return on investment than Edenred SA. However, Sartorius Stedim is 1.11 times more volatile than Edenred SA. It trades about 0.09 of its potential returns per unit of risk. Edenred SA is currently generating about -0.01 per unit of risk. If you would invest  18,035  in Sartorius Stedim Biotech on November 29, 2024 and sell it today you would earn a total of  1,830  from holding Sartorius Stedim Biotech or generate 10.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Sartorius Stedim Biotech  vs.  Edenred SA

Sartorius Stedim Biotech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 6 (%) 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 March 2025.

Edenred SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edenred SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edenred SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sartorius Stedim and Edenred SA

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

The idea behind Sartorius Stedim Biotech and Edenred SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..