Correlation Between Vastned Retail and SFC Energy

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

By analyzing existing cross correlation between Vastned Retail NV and SFC Energy AG, you can compare the effects of market volatilities on Vastned Retail and SFC Energy 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 Vastned Retail with a short position of SFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and SFC Energy.

Diversification Opportunities for Vastned Retail and SFC Energy

-0.22

Correlation Coefficient

Vastned Retail  SFC Energy

Very good diversification

The 3 months correlation between Vastned and SFC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and SFC Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFC Energy AG and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with SFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFC Energy AG has no effect on the direction of Vastned Retail i.e., Vastned Retail and SFC Energy go up and down completely randomly.

Pair Corralation between Vastned Retail and SFC Energy

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the SFC Energy. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 2.81 times less risky than SFC Energy. The stock trades about -0.15 of its potential returns per unit of risk. The SFC Energy AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,646  in SFC Energy AG on September 14, 2024 and sell it today you would earn a total of  62.00  from holding SFC Energy AG or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Vastned Retail NV  vs.  SFC Energy AG

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SFC Energy AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFC Energy AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vastned Retail and SFC Energy

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

The idea behind Vastned Retail NV and SFC Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.