Correlation Between Soditech and CMG Cleantech
Can any of the company-specific risk be diversified away by investing in both Soditech and CMG Cleantech 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 CMG Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and CMG Cleantech SA, you can compare the effects of market volatilities on Soditech and CMG Cleantech 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 CMG Cleantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and CMG Cleantech.
Diversification Opportunities for Soditech and CMG Cleantech
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Soditech and CMG is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and CMG Cleantech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Cleantech 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 CMG Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Cleantech SA has no effect on the direction of Soditech i.e., Soditech and CMG Cleantech go up and down completely randomly.
Pair Corralation between Soditech and CMG Cleantech
Assuming the 90 days trading horizon Soditech SA is expected to under-perform the CMG Cleantech. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 2.87 times less risky than CMG Cleantech. The stock trades about -0.29 of its potential returns per unit of risk. The CMG Cleantech SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 119.00 in CMG Cleantech SA on September 12, 2024 and sell it today you would earn a total of 9.00 from holding CMG Cleantech SA or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soditech SA vs. CMG Cleantech SA
Performance |
| Timeline |
| Soditech SA |
| CMG Cleantech SA |
Soditech and CMG Cleantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and CMG Cleantech
The main advantage of trading using opposite Soditech and CMG Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, CMG Cleantech 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 CMG Cleantech will offset losses from the drop in CMG Cleantech's long position.The idea behind Soditech SA and CMG Cleantech 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.| CMG Cleantech vs. Groupe Sfpi | CMG Cleantech vs. NSE SA | CMG Cleantech vs. Manitou BF SA | CMG Cleantech vs. Ossiam Minimum Variance |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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