Correlation Between SOFI TECHNOLOGIES and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both SOFI TECHNOLOGIES and AOYAMA TRADING 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 SOFI TECHNOLOGIES and AOYAMA TRADING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFI TECHNOLOGIES and AOYAMA TRADING, you can compare the effects of market volatilities on SOFI TECHNOLOGIES and AOYAMA TRADING 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 SOFI TECHNOLOGIES with a short position of AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and AOYAMA TRADING.
Diversification Opportunities for SOFI TECHNOLOGIES and AOYAMA TRADING
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOFI and AOYAMA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES are associated (or correlated) with AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between SOFI TECHNOLOGIES and AOYAMA TRADING
Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to under-perform the AOYAMA TRADING. In addition to that, SOFI TECHNOLOGIES is 2.86 times more volatile than AOYAMA TRADING. It trades about -0.13 of its total potential returns per unit of risk. AOYAMA TRADING is currently generating about -0.12 per unit of volatility. If you would invest 1,258 in AOYAMA TRADING on January 9, 2025 and sell it today you would lose (68.00) from holding AOYAMA TRADING or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOFI TECHNOLOGIES vs. AOYAMA TRADING
Performance |
| Timeline |
| SOFI TECHNOLOGIES |
| AOYAMA TRADING |
SOFI TECHNOLOGIES and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFI TECHNOLOGIES and AOYAMA TRADING
The main advantage of trading using opposite SOFI TECHNOLOGIES and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| SOFI TECHNOLOGIES vs. Peijia Medical Limited | SOFI TECHNOLOGIES vs. Grand Canyon Education | SOFI TECHNOLOGIES vs. Adtalem Global Education | SOFI TECHNOLOGIES vs. EEDUCATION ALBERT AB |
| AOYAMA TRADING vs. ECHO INVESTMENT ZY | AOYAMA TRADING vs. Tower One Wireless | AOYAMA TRADING vs. Japan Asia Investment | AOYAMA TRADING vs. 24SEVENOFFICE GROUP AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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