Correlation Between Derichebourg and Soitec SA
Can any of the company-specific risk be diversified away by investing in both Derichebourg and Soitec 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 Derichebourg and Soitec SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Derichebourg and Soitec SA, you can compare the effects of market volatilities on Derichebourg and Soitec 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 Derichebourg with a short position of Soitec SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derichebourg and Soitec SA.
Diversification Opportunities for Derichebourg and Soitec SA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Derichebourg and Soitec is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Soitec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soitec SA and Derichebourg 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 Derichebourg are associated (or correlated) with Soitec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soitec SA has no effect on the direction of Derichebourg i.e., Derichebourg and Soitec SA go up and down completely randomly.
Pair Corralation between Derichebourg and Soitec SA
Assuming the 90 days trading horizon Derichebourg is expected to generate 0.76 times more return on investment than Soitec SA. However, Derichebourg is 1.31 times less risky than Soitec SA. It trades about 0.0 of its potential returns per unit of risk. Soitec SA is currently generating about -0.04 per unit of risk. If you would invest 489.00 in Derichebourg on August 31, 2024 and sell it today you would lose (32.00) from holding Derichebourg or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Derichebourg vs. Soitec SA
Performance |
| Timeline |
| Derichebourg |
| Soitec SA |
Derichebourg and Soitec SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derichebourg and Soitec SA
The main advantage of trading using opposite Derichebourg and Soitec SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derichebourg position performs unexpectedly, Soitec 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 Soitec SA will offset losses from the drop in Soitec SA's long position.| Derichebourg vs. Eramet SA | Derichebourg vs. Trigano SA | Derichebourg vs. Soitec SA | Derichebourg vs. Rubis SCA |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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