Correlation Between Samse SA and Edenred SA

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

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

Diversification Opportunities for Samse SA and Edenred SA

0.23

Correlation Coefficient

Samse SA  Edenred SA

Modest diversification

The 3 months correlation between Samse and Edenred is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Samse SA and Edenred SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred SA and Samse 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 Samse SA are associated (or correlated) with Edenred SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred SA has no effect on the direction of Samse SA i.e., Samse SA and Edenred SA go up and down completely randomly.

Pair Corralation between Samse SA and Edenred SA

Assuming the 90 days trading horizon Samse SA is expected to generate 0.77 times more return on investment than Edenred SA. However, Samse SA is 1.3 times less risky than Edenred SA. It trades about -0.01 of its potential returns per unit of risk. Edenred SA is currently generating about -0.04 per unit of risk. If you would invest  15,881  in Samse SA on September 14, 2024 and sell it today you would lose (2,081) from holding Samse SA or give up 13.1% of portfolio value over 90 days.

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

Samse SA  vs.  Edenred SA

Samse SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Edenred SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Samse SA and Edenred SA

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

The idea behind Samse SA and Edenred 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.