Correlation Between SGS SA and Straumann Holding

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

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

Diversification Opportunities for SGS SA and Straumann Holding

0.86

Correlation Coefficient

SGS SA  Straumann Holding

Very poor diversification

The 3 months correlation between SGS and Straumann is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding and SGS 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 SGS SA are associated (or correlated) with Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of SGS SA i.e., SGS SA and Straumann Holding go up and down completely randomly.

Pair Corralation between SGS SA and Straumann Holding

Assuming the 90 days trading horizon SGS SA is expected to generate 1.43 times less return on investment than Straumann Holding. But when comparing it to its historical volatility, SGS SA is 1.29 times less risky than Straumann Holding. It trades about 0.18 of its potential returns per unit of risk. Straumann Holding AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  11,340  in Straumann Holding AG on September 15, 2024 and sell it today you would earn a total of  525.00  from holding Straumann Holding AG or generate 4.63% return on investment over 90 days.

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

SGS SA  vs.  Straumann Holding AG

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Straumann Holding 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 SGS SA and Straumann Holding

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

The idea behind SGS SA and Straumann Holding AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..