Correlation Between Solutions and Solocal Group
Can any of the company-specific risk be diversified away by investing in both Solutions and Solocal 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 Solutions and Solocal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solutions 30 SE and Solocal Group SA, you can compare the effects of market volatilities on Solutions and Solocal 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 Solutions with a short position of Solocal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solutions and Solocal Group.
Diversification Opportunities for Solutions and Solocal Group
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solutions and Solocal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Solutions 30 SE and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group SA and Solutions 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 Solutions 30 SE are associated (or correlated) with Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Solutions i.e., Solutions and Solocal Group go up and down completely randomly.
Pair Corralation between Solutions and Solocal Group
Assuming the 90 days trading horizon Solutions 30 SE is expected to generate 1.9 times more return on investment than Solocal Group. However, Solutions is 1.9 times more volatile than Solocal Group SA. It trades about 0.23 of its potential returns per unit of risk. Solocal Group SA is currently generating about -0.07 per unit of risk. If you would invest 88.00 in Solutions 30 SE on December 6, 2024 and sell it today you would earn a total of 78.00 from holding Solutions 30 SE or generate 88.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solutions 30 SE vs. Solocal Group SA
Performance |
| Timeline |
| Solutions 30 SE |
| Solocal Group SA |
Solutions and Solocal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solutions and Solocal Group
The main advantage of trading using opposite Solutions and Solocal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solutions position performs unexpectedly, Solocal 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 Solocal Group will offset losses from the drop in Solocal Group's long position.| Solutions vs. Sogeclair SA | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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