Correlation Between Stef SA and Vicat SA

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

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

Diversification Opportunities for Stef SA and Vicat SA

-0.25

Correlation Coefficient

Stef SA  Vicat SA

Very good diversification

The 3 months correlation between Stef and Vicat is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Vicat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicat 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 Vicat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicat SA has no effect on the direction of Stef SA i.e., Stef SA and Vicat SA go up and down completely randomly.

Pair Corralation between Stef SA and Vicat SA

Assuming the 90 days trading horizon Stef SA is expected to under-perform the Vicat SA. But the stock apears to be less risky and, when comparing its historical volatility, Stef SA is 1.33 times less risky than Vicat SA. The stock trades about -0.06 of its potential returns per unit of risk. The Vicat SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,615  in Vicat SA on December 29, 2024 and sell it today you would earn a total of  1,495  from holding Vicat SA or generate 41.36% return on investment over 90 days.

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

Stef SA  vs.  Vicat 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.

Vicat SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stef SA and Vicat SA

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

The idea behind Stef SA and Vicat 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.