Correlation Between Aperam SA and Sif Holding

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

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

Diversification Opportunities for Aperam SA and Sif Holding

0.39

Correlation Coefficient

Aperam SA  Sif Holding

Weak diversification

The 3 months correlation between Aperam and Sif is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aperam SA and Sif Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sif Holding NV and Aperam 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 Aperam SA are associated (or correlated) with Sif Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sif Holding NV has no effect on the direction of Aperam SA i.e., Aperam SA and Sif Holding go up and down completely randomly.

Pair Corralation between Aperam SA and Sif Holding

Assuming the 90 days trading horizon Aperam SA is expected to under-perform the Sif Holding. In addition to that, Aperam SA is 1.13 times more volatile than Sif Holding NV. It trades about -0.11 of its total potential returns per unit of risk. Sif Holding NV is currently generating about -0.11 per unit of volatility. If you would invest  1,086  in Sif Holding NV on February 22, 2024 and sell it today you would lose (78.00) from holding Sif Holding NV or give up 7.18% of portfolio value over 90 days.

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

Aperam SA  vs.  Sif Holding NV

Aperam SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aperam SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sif Holding NV

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Sif Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sif Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aperam SA and Sif Holding

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

The idea behind Aperam SA and Sif Holding NV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.