Correlation Between Schneider Electric and Baikowski SASU

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

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

Diversification Opportunities for Schneider Electric and Baikowski SASU

-0.21

Correlation Coefficient

Schneider Electric  Baikowski SASU

Very good diversification

The 3 months correlation between Schneider and Baikowski is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Baikowski SASU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baikowski SASU and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Baikowski SASU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baikowski SASU has no effect on the direction of Schneider Electric i.e., Schneider Electric and Baikowski SASU go up and down completely randomly.

Pair Corralation between Schneider Electric and Baikowski SASU

Assuming the 90 days horizon Schneider Electric SE is expected to under-perform the Baikowski SASU. In addition to that, Schneider Electric is 1.14 times more volatile than Baikowski SASU. It trades about -0.04 of its total potential returns per unit of risk. Baikowski SASU is currently generating about 0.14 per unit of volatility. If you would invest  1,420  in Baikowski SASU on December 4, 2024 and sell it today you would earn a total of  280.00  from holding Baikowski SASU or generate 19.72% return on investment over 90 days.

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

Schneider Electric SE  vs.  Baikowski SASU

Schneider Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schneider Electric SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Baikowski SASU

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baikowski SASU are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Baikowski SASU reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schneider Electric and Baikowski SASU

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

The idea behind Schneider Electric SE and Baikowski SASU 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.