Correlation Between Dassault Systemes and Sartorius Stedim

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

By analyzing existing cross correlation between Dassault Systemes SE and Sartorius Stedim Biotech, you can compare the effects of market volatilities on Dassault Systemes and Sartorius Stedim 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 Dassault Systemes with a short position of Sartorius Stedim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Sartorius Stedim.

Diversification Opportunities for Dassault Systemes and Sartorius Stedim

0.83

Correlation Coefficient

Dassault Systemes  Sartorius Stedim

Very poor diversification

The 3 months correlation between Dassault and Sartorius is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Sartorius Stedim go up and down completely randomly.

Pair Corralation between Dassault Systemes and Sartorius Stedim

Assuming the 90 days trading horizon Dassault Systemes SE is expected to generate 0.62 times more return on investment than Sartorius Stedim. However, Dassault Systemes SE is 1.61 times less risky than Sartorius Stedim. It trades about 0.02 of its potential returns per unit of risk. Sartorius Stedim Biotech is currently generating about -0.02 per unit of risk. If you would invest  3,311  in Dassault Systemes SE on March 7, 2024 and sell it today you would earn a total of  399.00  from holding Dassault Systemes SE or generate 12.05% return on investment over 90 days.

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

Dassault Systemes SE  vs.  Sartorius Stedim Biotech

Dassault Systemes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systemes 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.

Sartorius Stedim Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Stedim Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dassault Systemes and Sartorius Stedim

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

The idea behind Dassault Systemes SE and Sartorius Stedim Biotech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.