Correlation Between Total Soft and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Total Soft and SFA Engineering 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 Total Soft and SFA Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and SFA Engineering, you can compare the effects of market volatilities on Total Soft and SFA Engineering 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 Total Soft with a short position of SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and SFA Engineering.
Diversification Opportunities for Total Soft and SFA Engineering
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Total and SFA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering and Total Soft 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 Total Soft Bank are associated (or correlated) with SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Total Soft i.e., Total Soft and SFA Engineering go up and down completely randomly.
Pair Corralation between Total Soft and SFA Engineering
Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the SFA Engineering. In addition to that, Total Soft is 1.87 times more volatile than SFA Engineering. It trades about -0.08 of its total potential returns per unit of risk. SFA Engineering is currently generating about 0.06 per unit of volatility. If you would invest 2,055,000 in SFA Engineering on September 2, 2024 and sell it today you would earn a total of 75,000 from holding SFA Engineering or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. SFA Engineering
Performance |
| Timeline |
| Total Soft Bank |
| SFA Engineering |
Total Soft and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and SFA Engineering
The main advantage of trading using opposite Total Soft and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering's long position.| Total Soft vs. Devsisters corporation | Total Soft vs. Konan Technology | Total Soft vs. Nice Information Telecommunication | Total Soft vs. InfoBank |
| SFA Engineering vs. Dongsin Engineering Construction | SFA Engineering vs. Doosan Fuel Cell | SFA Engineering vs. Daishin Balance 1 | SFA Engineering vs. Total Soft Bank |
Check out your portfolio center.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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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