Correlation Between Visteon Corp and SGS SA

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

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

Diversification Opportunities for Visteon Corp and SGS SA

-0.03

Correlation Coefficient

Visteon Corp  SGS SA

Good diversification

The 3 months correlation between Visteon and SGS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Visteon Corp 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 Visteon Corp are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Visteon Corp i.e., Visteon Corp and SGS SA go up and down completely randomly.

Pair Corralation between Visteon Corp and SGS SA

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the SGS SA. In addition to that, Visteon Corp is 1.84 times more volatile than SGS SA. It trades about -0.06 of its total potential returns per unit of risk. SGS SA is currently generating about 0.01 per unit of volatility. If you would invest  1,008  in SGS SA on October 9, 2024 and sell it today you would earn a total of  2.00  from holding SGS SA or generate 0.2% return on investment over 90 days.

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

Visteon Corp  vs.  SGS SA

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Visteon Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 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.

Pair Trading with Visteon Corp and SGS SA

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

The idea behind Visteon Corp and SGS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.