Correlation Between Galenica Sante and SIG Combibloc

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

By analyzing existing cross correlation between Galenica Sante AG and SIG Combibloc Group, you can compare the effects of market volatilities on Galenica Sante and SIG Combibloc 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 Galenica Sante with a short position of SIG Combibloc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galenica Sante and SIG Combibloc.

Diversification Opportunities for Galenica Sante and SIG Combibloc

0.41

Correlation Coefficient

Galenica Sante  SIG Combibloc

Very weak diversification

The 3 months correlation between Galenica and SIG is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Galenica Sante AG and SIG Combibloc Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIG Combibloc Group and Galenica Sante 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 Galenica Sante AG are associated (or correlated) with SIG Combibloc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIG Combibloc Group has no effect on the direction of Galenica Sante i.e., Galenica Sante and SIG Combibloc go up and down completely randomly.

Pair Corralation between Galenica Sante and SIG Combibloc

Assuming the 90 days trading horizon Galenica Sante AG is expected to generate 0.5 times more return on investment than SIG Combibloc. However, Galenica Sante AG is 1.99 times less risky than SIG Combibloc. It trades about 0.11 of its potential returns per unit of risk. SIG Combibloc Group is currently generating about -0.03 per unit of risk. If you would invest  7,435  in Galenica Sante AG on December 30, 2024 and sell it today you would earn a total of  555.00  from holding Galenica Sante AG or generate 7.46% return on investment over 90 days.

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

Galenica Sante AG  vs.  SIG Combibloc Group

Galenica Sante AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galenica Sante AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Galenica Sante may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SIG Combibloc Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIG Combibloc Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SIG Combibloc is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Galenica Sante and SIG Combibloc

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

The idea behind Galenica Sante AG and SIG Combibloc Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.