Correlation Between Ipsen SA and Sartorius Stedim

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

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

Diversification Opportunities for Ipsen SA and Sartorius Stedim

0.64

Correlation Coefficient

Ipsen SA  Sartorius Stedim

Poor diversification

The 3 months correlation between Ipsen and Sartorius is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech and Ipsen SA 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 Ipsen SA are associated (or correlated) with Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of Ipsen SA i.e., Ipsen SA and Sartorius Stedim go up and down completely randomly.

Pair Corralation between Ipsen SA and Sartorius Stedim

Assuming the 90 days trading horizon Ipsen SA is expected to under-perform the Sartorius Stedim. But the stock apears to be less risky and, when comparing its historical volatility, Ipsen SA is 1.38 times less risky than Sartorius Stedim. The stock trades about -0.02 of its potential returns per unit of risk. The Sartorius Stedim Biotech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18,425  in Sartorius Stedim Biotech on December 30, 2024 and sell it today you would earn a total of  140.00  from holding Sartorius Stedim Biotech or generate 0.76% return on investment over 90 days.

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

Ipsen SA  vs.  Sartorius Stedim Biotech

Ipsen SA

Risk-Adjusted Performance

Very Weak

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

Sartorius Stedim Biotech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Sartorius Stedim is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ipsen SA and Sartorius Stedim

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

The idea behind Ipsen SA and Sartorius Stedim Biotech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.