Correlation Between PureTech Health and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both PureTech Health and SoftBank Group 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 PureTech Health and SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and SoftBank Group Corp, you can compare the effects of market volatilities on PureTech Health and SoftBank Group 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 PureTech Health with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and SoftBank Group.
Diversification Opportunities for PureTech Health and SoftBank Group
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PureTech and SoftBank is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and PureTech Health 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 PureTech Health plc are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of PureTech Health i.e., PureTech Health and SoftBank Group go up and down completely randomly.
Pair Corralation between PureTech Health and SoftBank Group
Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the SoftBank Group. But the stock apears to be less risky and, when comparing its historical volatility, PureTech Health plc is 1.6 times less risky than SoftBank Group. The stock trades about -0.06 of its potential returns per unit of risk. The SoftBank Group Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 870,052 in SoftBank Group Corp on December 4, 2024 and sell it today you would lose (37,052) from holding SoftBank Group Corp or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.98% |
| Values | Daily Returns |
PureTech Health plc vs. SoftBank Group Corp
Performance |
| Timeline |
| PureTech Health plc |
| SoftBank Group Corp |
PureTech Health and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and SoftBank Group
The main advantage of trading using opposite PureTech Health and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| PureTech Health vs. Empire Metals Limited | PureTech Health vs. Silvercorp Metals | PureTech Health vs. Cairo Communication SpA | PureTech Health vs. Critical Metals Plc |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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