Correlation Between Flagship Investments and SOCO
Can any of the company-specific risk be diversified away by investing in both Flagship Investments and SOCO 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 Flagship Investments and SOCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and SOCO Corporation, you can compare the effects of market volatilities on Flagship Investments and SOCO 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 Flagship Investments with a short position of SOCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and SOCO.
Diversification Opportunities for Flagship Investments and SOCO
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Flagship and SOCO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and SOCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCO and Flagship Investments 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 Flagship Investments are associated (or correlated) with SOCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCO has no effect on the direction of Flagship Investments i.e., Flagship Investments and SOCO go up and down completely randomly.
Pair Corralation between Flagship Investments and SOCO
Assuming the 90 days trading horizon Flagship Investments is expected to generate 3.74 times less return on investment than SOCO. But when comparing it to its historical volatility, Flagship Investments is 4.66 times less risky than SOCO. It trades about 0.3 of its potential returns per unit of risk. SOCO Corporation is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9.10 in SOCO Corporation on September 4, 2024 and sell it today you would earn a total of 2.90 from holding SOCO Corporation or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Flagship Investments vs. SOCO Corp.
Performance |
| Timeline |
| Flagship Investments |
| SOCO |
Flagship Investments and SOCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and SOCO
The main advantage of trading using opposite Flagship Investments and SOCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, SOCO 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 SOCO will offset losses from the drop in SOCO's long position.| Flagship Investments vs. Australian Foundation Investment | Flagship Investments vs. GQG Partners DRC | Flagship Investments vs. MFF Capital Investments | Flagship Investments vs. Metrics Master Income |
| SOCO vs. Dug Technology | SOCO vs. Mayfield Childcare | SOCO vs. Mach7 Technologies | SOCO vs. WiseTech Global Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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