Correlation Between Soditech and Groupimo
Can any of the company-specific risk be diversified away by investing in both Soditech and Groupimo 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 Soditech and Groupimo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Groupimo SA, you can compare the effects of market volatilities on Soditech and Groupimo 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 Soditech with a short position of Groupimo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Groupimo.
Diversification Opportunities for Soditech and Groupimo
Average diversification
The 3 months correlation between Soditech and Groupimo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Groupimo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupimo SA and Soditech 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 Soditech SA are associated (or correlated) with Groupimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupimo SA has no effect on the direction of Soditech i.e., Soditech and Groupimo go up and down completely randomly.
Pair Corralation between Soditech and Groupimo
Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Groupimo. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 58.24 times less risky than Groupimo. The stock trades about -0.29 of its potential returns per unit of risk. The Groupimo SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Groupimo SA on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Groupimo SA or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soditech SA vs. Groupimo SA
Performance |
| Timeline |
| Soditech SA |
| Groupimo SA |
Soditech and Groupimo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and Groupimo
The main advantage of trading using opposite Soditech and Groupimo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Groupimo 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 Groupimo will offset losses from the drop in Groupimo's long position.The idea behind Soditech SA and Groupimo SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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