Correlation Between Safran SA and Exail Technologies

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

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

Diversification Opportunities for Safran SA and Exail Technologies

0.33

Correlation Coefficient

Safran SA  Exail Technologies

Weak diversification

The 3 months correlation between Safran and Exail is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Exail Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exail Technologies and Safran 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 Safran SA are associated (or correlated) with Exail Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exail Technologies has no effect on the direction of Safran SA i.e., Safran SA and Exail Technologies go up and down completely randomly.

Pair Corralation between Safran SA and Exail Technologies

Assuming the 90 days trading horizon Safran SA is expected to generate 0.53 times more return on investment than Exail Technologies. However, Safran SA is 1.88 times less risky than Exail Technologies. It trades about 0.24 of its potential returns per unit of risk. Exail Technologies SA is currently generating about -0.07 per unit of risk. If you would invest  21,090  in Safran SA on September 5, 2024 and sell it today you would earn a total of  1,640  from holding Safran SA or generate 7.78% return on investment over 90 days.

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

Safran SA  vs.  Exail Technologies SA

Safran SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Safran SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Safran SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Exail Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Safran SA and Exail Technologies

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

The idea behind Safran SA and Exail Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.