Correlation Between SGS SA and Clariant

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

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

Diversification Opportunities for SGS SA and Clariant

0.63

Correlation Coefficient

SGS SA  Clariant

Poor diversification

The 3 months correlation between SGS and Clariant is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and Clariant AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clariant AG and SGS 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 SGS SA are associated (or correlated) with Clariant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clariant AG has no effect on the direction of SGS SA i.e., SGS SA and Clariant go up and down completely randomly.

Pair Corralation between SGS SA and Clariant

Assuming the 90 days trading horizon SGS SA is expected to generate 0.57 times more return on investment than Clariant. However, SGS SA is 1.76 times less risky than Clariant. It trades about -0.04 of its potential returns per unit of risk. Clariant AG is currently generating about -0.06 per unit of risk. If you would invest  8,424  in SGS SA on May 10, 2025 and sell it today you would lose (242.00) from holding SGS SA or give up 2.87% of portfolio value over 90 days.

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

SGS SA  vs.  Clariant AG

SGS SA

Risk-Adjusted Performance

Weakest

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SGS SA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Clariant AG

Risk-Adjusted Performance

Weakest

Over the last 90 days Clariant AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with SGS SA and Clariant

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

The idea behind SGS SA and Clariant 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.