Correlation Between BEL Small and Softimat
Can any of the company-specific risk be diversified away by investing in both BEL Small and Softimat 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 BEL Small and Softimat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEL Small and Softimat SA, you can compare the effects of market volatilities on BEL Small and Softimat 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 BEL Small with a short position of Softimat. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL Small and Softimat.
Diversification Opportunities for BEL Small and Softimat
Poor diversification
The 3 months correlation between BEL and Softimat is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BEL Small and Softimat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softimat SA and BEL Small 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 BEL Small are associated (or correlated) with Softimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softimat SA has no effect on the direction of BEL Small i.e., BEL Small and Softimat go up and down completely randomly.
Pair Corralation between BEL Small and Softimat
Assuming the 90 days trading horizon BEL Small is expected to under-perform the Softimat. In addition to that, BEL Small is 2.55 times more volatile than Softimat SA. It trades about -0.55 of its total potential returns per unit of risk. Softimat SA is currently generating about -0.21 per unit of volatility. If you would invest 93.00 in Softimat SA on August 30, 2024 and sell it today you would lose (1.00) from holding Softimat SA or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEL Small vs. Softimat SA
Performance |
| Timeline |
BEL Small and Softimat Volatility Contrast
Predicted Return Density |
| Returns |
BEL Small
Pair trading matchups for BEL Small
Softimat SA
Pair trading matchups for Softimat
Pair Trading with BEL Small and Softimat
The main advantage of trading using opposite BEL Small and Softimat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEL Small position performs unexpectedly, Softimat 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 Softimat will offset losses from the drop in Softimat's long position.| BEL Small vs. Home Invest Belgium | BEL Small vs. Keyware Technologies NV | BEL Small vs. Retail Estates | BEL Small vs. Shurgard Self Storage |
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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 Stocks Directory module to find actively traded stocks across global markets.
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