Correlation Between Essilor International and Sartorius Aktiengesellscha

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

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

Diversification Opportunities for Essilor International and Sartorius Aktiengesellscha

-0.61

Correlation Coefficient

Essilor International  Sartorius Aktiengesellscha

Excellent diversification

The 3 months correlation between Essilor and Sartorius is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Sartorius Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Aktiengesellscha and Essilor International 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 Essilor International SA are associated (or correlated) with Sartorius Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Aktiengesellscha has no effect on the direction of Essilor International i.e., Essilor International and Sartorius Aktiengesellscha go up and down completely randomly.

Pair Corralation between Essilor International and Sartorius Aktiengesellscha

Assuming the 90 days horizon Essilor International SA is expected to generate 0.47 times more return on investment than Sartorius Aktiengesellscha. However, Essilor International SA is 2.11 times less risky than Sartorius Aktiengesellscha. It trades about 0.05 of its potential returns per unit of risk. Sartorius Aktiengesellschaft is currently generating about -0.09 per unit of risk. If you would invest  11,697  in Essilor International SA on September 26, 2024 and sell it today you would earn a total of  363.00  from holding Essilor International SA or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Essilor International SA  vs.  Sartorius Aktiengesellschaft

Essilor International

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Essilor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sartorius Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Essilor International and Sartorius Aktiengesellscha

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

The idea behind Essilor International SA and Sartorius Aktiengesellschaft 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.