Correlation Between Elia Group and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Elia Group and Solvay 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 Elia Group and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elia Group SANV and Solvay SA, you can compare the effects of market volatilities on Elia Group and Solvay 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 Elia Group with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elia Group and Solvay SA.
Diversification Opportunities for Elia Group and Solvay SA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elia and Solvay is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Elia Group SANV and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Elia Group 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 Elia Group SANV are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Elia Group i.e., Elia Group and Solvay SA go up and down completely randomly.
Pair Corralation between Elia Group and Solvay SA
Assuming the 90 days trading horizon Elia Group SANV is expected to under-perform the Solvay SA. But the stock apears to be less risky and, when comparing its historical volatility, Elia Group SANV is 1.3 times less risky than Solvay SA. The stock trades about -0.05 of its potential returns per unit of risk. The Solvay SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Solvay SA on August 26, 2024 and sell it today you would earn a total of 1,714 from holding Solvay SA or generate 121.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elia Group SANV vs. Solvay SA
Performance |
| Timeline |
| Elia Group SANV |
| Solvay SA |
Elia Group and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elia Group and Solvay SA
The main advantage of trading using opposite Elia Group and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elia Group position performs unexpectedly, Solvay 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Elia Group vs. Ackermans Van Haaren | Elia Group vs. Groep Brussel Lambert | Elia Group vs. Sofina Socit Anonyme | Elia Group vs. ageas SANV |
| Solvay SA vs. Ackermans Van Haaren | Solvay SA vs. NV Bekaert SA | Solvay SA vs. Groep Brussel Lambert | Solvay SA vs. Tubize Fin |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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