Correlation Between SGS SA and DSV Panalpina

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

By analyzing existing cross correlation between SGS SA and DSV Panalpina AS, you can compare the effects of market volatilities on SGS SA and DSV Panalpina 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 DSV Panalpina. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGS SA and DSV Panalpina.

Diversification Opportunities for SGS SA and DSV Panalpina

0.34

Correlation Coefficient

SGS SA  DSV Panalpina

Weak diversification

The 3 months correlation between SGS and DSV is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of SGS SA i.e., SGS SA and DSV Panalpina go up and down completely randomly.

Pair Corralation between SGS SA and DSV Panalpina

Assuming the 90 days horizon SGS SA is expected to generate 1.03 times less return on investment than DSV Panalpina. But when comparing it to its historical volatility, SGS SA is 1.13 times less risky than DSV Panalpina. It trades about 0.06 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,987  in DSV Panalpina AS on October 1, 2024 and sell it today you would earn a total of  1,840  from holding DSV Panalpina AS or generate 20.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

SGS SA  vs.  DSV Panalpina AS

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 latest uncertain 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.

DSV Panalpina AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DSV Panalpina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SGS SA and DSV Panalpina

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

The idea behind SGS SA and DSV Panalpina AS 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.