Correlation Between Stef SA and Witbe Net

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

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

Diversification Opportunities for Stef SA and Witbe Net

-0.18

Correlation Coefficient

Stef SA  Witbe Net

Good diversification

The 3 months correlation between Stef and Witbe is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Witbe Net SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Witbe Net SA and Stef 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 Stef SA are associated (or correlated) with Witbe Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Witbe Net SA has no effect on the direction of Stef SA i.e., Stef SA and Witbe Net go up and down completely randomly.

Pair Corralation between Stef SA and Witbe Net

Assuming the 90 days trading horizon Stef SA is expected to generate 0.44 times more return on investment than Witbe Net. However, Stef SA is 2.25 times less risky than Witbe Net. It trades about -0.05 of its potential returns per unit of risk. Witbe Net SA is currently generating about -0.09 per unit of risk. If you would invest  12,960  in Stef SA on December 28, 2024 and sell it today you would lose (700.00) from holding Stef SA or give up 5.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Stef SA  vs.  Witbe Net SA

Stef SA

Risk-Adjusted Performance

Very Weak

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

Witbe Net SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Witbe Net SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Stef SA and Witbe Net

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

The idea behind Stef SA and Witbe Net 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.