Correlation Between Softronic and Exsitec Holding
Can any of the company-specific risk be diversified away by investing in both Softronic and Exsitec Holding 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 Softronic and Exsitec Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Exsitec Holding AB, you can compare the effects of market volatilities on Softronic and Exsitec Holding 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 Softronic with a short position of Exsitec Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Exsitec Holding.
Diversification Opportunities for Softronic and Exsitec Holding
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Softronic and Exsitec is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Exsitec Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exsitec Holding AB and Softronic 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 Softronic AB are associated (or correlated) with Exsitec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exsitec Holding AB has no effect on the direction of Softronic i.e., Softronic and Exsitec Holding go up and down completely randomly.
Pair Corralation between Softronic and Exsitec Holding
Assuming the 90 days trading horizon Softronic AB is expected to generate 0.72 times more return on investment than Exsitec Holding. However, Softronic AB is 1.38 times less risky than Exsitec Holding. It trades about 0.03 of its potential returns per unit of risk. Exsitec Holding AB is currently generating about -0.01 per unit of risk. If you would invest 1,905 in Softronic AB on November 27, 2024 and sell it today you would earn a total of 420.00 from holding Softronic AB or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Exsitec Holding AB
Performance |
| Timeline |
| Softronic AB |
| Exsitec Holding AB |
Softronic and Exsitec Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Exsitec Holding
The main advantage of trading using opposite Softronic and Exsitec Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Exsitec Holding 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 Exsitec Holding will offset losses from the drop in Exsitec Holding's long position.| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
| Exsitec Holding vs. CAG Group AB | Exsitec Holding vs. Know IT AB | Exsitec Holding vs. Enea AB | Exsitec Holding vs. NCAB Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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