Correlation Between Sodexo PK and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both Sodexo PK and Alfa Laval 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 Sodexo PK and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Alfa Laval AB, you can compare the effects of market volatilities on Sodexo PK and Alfa Laval 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 Sodexo PK with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Alfa Laval.
Diversification Opportunities for Sodexo PK and Alfa Laval
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sodexo and Alfa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Sodexo PK 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 Sodexo PK are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Sodexo PK i.e., Sodexo PK and Alfa Laval go up and down completely randomly.
Pair Corralation between Sodexo PK and Alfa Laval
Assuming the 90 days horizon Sodexo PK is expected to generate 0.78 times more return on investment than Alfa Laval. However, Sodexo PK is 1.29 times less risky than Alfa Laval. It trades about -0.11 of its potential returns per unit of risk. Alfa Laval AB is currently generating about -0.12 per unit of risk. If you would invest 1,761 in Sodexo PK on August 25, 2024 and sell it today you would lose (58.00) from holding Sodexo PK or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sodexo PK vs. Alfa Laval AB
Performance |
| Timeline |
| Sodexo PK |
| Alfa Laval AB |
Sodexo PK and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Alfa Laval
The main advantage of trading using opposite Sodexo PK and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| Sodexo PK vs. Alfa Laval AB | Sodexo PK vs. Randstad Holdings NV | Sodexo PK vs. Sandvik AB ADR | Sodexo PK vs. Sonova Holding AG |
| Alfa Laval vs. Aumann AG | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB | Alfa Laval vs. American Commerce Solutions |
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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