Correlation Between Groupe Sfpi and Alstom SA

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

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

Diversification Opportunities for Groupe Sfpi and Alstom SA

-0.43

Correlation Coefficient

Groupe Sfpi  Alstom SA

Very good diversification

The 3 months correlation between Groupe and Alstom is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Groupe Sfpi and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA and Groupe Sfpi 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 Groupe Sfpi are associated (or correlated) with Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Groupe Sfpi i.e., Groupe Sfpi and Alstom SA go up and down completely randomly.

Pair Corralation between Groupe Sfpi and Alstom SA

Assuming the 90 days trading horizon Groupe Sfpi is expected to generate 0.59 times more return on investment than Alstom SA. However, Groupe Sfpi is 1.69 times less risky than Alstom SA. It trades about 0.17 of its potential returns per unit of risk. Alstom SA is currently generating about 0.04 per unit of risk. If you would invest  199.00  in Groupe Sfpi on April 22, 2025 and sell it today you would earn a total of  38.00  from holding Groupe Sfpi or generate 19.1% return on investment over 90 days.

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

Groupe Sfpi  vs.  Alstom SA

Groupe Sfpi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe Sfpi sustained solid returns over the last few months and may actually be approaching a breakup point.

Alstom SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alstom SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alstom SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Groupe Sfpi and Alstom SA

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

The idea behind Groupe Sfpi and Alstom 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.