Correlation Between Strer SE and Dentsu

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

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

Diversification Opportunities for Strer SE and Dentsu

0.76

Correlation Coefficient

Strer SE  Dentsu

Poor diversification

The 3 months correlation between Strer and Dentsu is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Strer SE Co and Dentsu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsu Group and Strer SE 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 Strer SE Co are associated (or correlated) with Dentsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsu Group has no effect on the direction of Strer SE i.e., Strer SE and Dentsu go up and down completely randomly.

Pair Corralation between Strer SE and Dentsu

Assuming the 90 days trading horizon Strer SE Co is expected to under-perform the Dentsu. In addition to that, Strer SE is 1.2 times more volatile than Dentsu Group. It trades about -0.02 of its total potential returns per unit of risk. Dentsu Group is currently generating about 0.14 per unit of volatility. If you would invest  2,300  in Dentsu Group on September 24, 2024 and sell it today you would earn a total of  80.00  from holding Dentsu Group or generate 3.48% return on investment over 90 days.

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

Strer SE Co  vs.  Dentsu Group

Strer SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strer SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dentsu Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Strer SE and Dentsu

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

The idea behind Strer SE Co and Dentsu 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.