Correlation Between Selectirente and Soditech
Can any of the company-specific risk be diversified away by investing in both Selectirente and Soditech 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 Selectirente and Soditech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selectirente and Soditech SA, you can compare the effects of market volatilities on Selectirente and Soditech 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 Selectirente with a short position of Soditech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selectirente and Soditech.
Diversification Opportunities for Selectirente and Soditech
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Selectirente and Soditech is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Selectirente and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Selectirente 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 Selectirente are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Selectirente i.e., Selectirente and Soditech go up and down completely randomly.
Pair Corralation between Selectirente and Soditech
Assuming the 90 days trading horizon Selectirente is expected to generate 1.27 times more return on investment than Soditech. However, Selectirente is 1.27 times more volatile than Soditech SA. It trades about 0.11 of its potential returns per unit of risk. Soditech SA is currently generating about -0.29 per unit of risk. If you would invest 8,600 in Selectirente on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Selectirente or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selectirente vs. Soditech SA
Performance |
| Timeline |
| Selectirente |
| Soditech SA |
Selectirente and Soditech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selectirente and Soditech
The main advantage of trading using opposite Selectirente and Soditech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selectirente position performs unexpectedly, Soditech 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 Soditech will offset losses from the drop in Soditech's long position.| Selectirente vs. Fonciere Lyonnaise | Selectirente vs. Fonciere Inea | Selectirente vs. Immobiliere Dassault SA | Selectirente vs. Frey 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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