Correlation Between Soditech and Netmedia Group
Can any of the company-specific risk be diversified away by investing in both Soditech and Netmedia 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 Soditech and Netmedia Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Netmedia Group SA, you can compare the effects of market volatilities on Soditech and Netmedia 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 Soditech with a short position of Netmedia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Netmedia Group.
Diversification Opportunities for Soditech and Netmedia Group
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Soditech and Netmedia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Netmedia Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmedia Group 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 Netmedia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmedia Group SA has no effect on the direction of Soditech i.e., Soditech and Netmedia Group go up and down completely randomly.
Pair Corralation between Soditech and Netmedia Group
Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Netmedia Group. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 8.0 times less risky than Netmedia Group. The stock trades about -0.21 of its potential returns per unit of risk. The Netmedia Group SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Netmedia Group SA on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Netmedia Group SA or generate 5.26% 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. Netmedia Group SA
Performance |
| Timeline |
| Soditech SA |
| Netmedia Group SA |
Soditech and Netmedia Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and Netmedia Group
The main advantage of trading using opposite Soditech and Netmedia Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Netmedia 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 Netmedia Group will offset losses from the drop in Netmedia Group's long position.The idea behind Soditech SA and Netmedia Group 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.| Netmedia Group vs. LVMH Mot Hennessy | Netmedia Group vs. LOreal SA | Netmedia Group vs. Hermes International SCA | Netmedia Group vs. Manitou BF SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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