Correlation Between Dine Brands and SGS SA

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

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

Diversification Opportunities for Dine Brands and SGS SA

-0.52

Correlation Coefficient

Dine Brands  SGS SA

Excellent diversification

The 3 months correlation between Dine and SGS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Dine Brands 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 Dine Brands Global are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Dine Brands i.e., Dine Brands and SGS SA go up and down completely randomly.

Pair Corralation between Dine Brands and SGS SA

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the SGS SA. In addition to that, Dine Brands is 2.11 times more volatile than SGS SA. It trades about -0.22 of its total potential returns per unit of risk. SGS SA is currently generating about -0.21 per unit of volatility. If you would invest  10,331  in SGS SA on September 15, 2024 and sell it today you would lose (591.00) from holding SGS SA or give up 5.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Dine Brands Global  vs.  SGS SA

Dine Brands Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Dine Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dine Brands and SGS SA

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

The idea behind Dine Brands Global and SGS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.