Correlation Between Softronic and FormPipe Software
Can any of the company-specific risk be diversified away by investing in both Softronic and FormPipe Software 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 FormPipe Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and FormPipe Software AB, you can compare the effects of market volatilities on Softronic and FormPipe Software 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 FormPipe Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and FormPipe Software.
Diversification Opportunities for Softronic and FormPipe Software
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Softronic and FormPipe is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and FormPipe Software AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormPipe Software 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 FormPipe Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormPipe Software has no effect on the direction of Softronic i.e., Softronic and FormPipe Software go up and down completely randomly.
Pair Corralation between Softronic and FormPipe Software
Assuming the 90 days trading horizon Softronic AB is expected to generate 0.72 times more return on investment than FormPipe Software. However, Softronic AB is 1.4 times less risky than FormPipe Software. It trades about 0.03 of its potential returns per unit of risk. FormPipe Software AB is currently generating about 0.0 per unit of risk. If you would invest 2,160 in Softronic AB on November 4, 2024 and sell it today you would earn a total of 160.00 from holding Softronic AB or generate 7.41% 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. FormPipe Software AB
Performance |
| Timeline |
| Softronic AB |
| FormPipe Software |
Softronic and FormPipe Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and FormPipe Software
The main advantage of trading using opposite Softronic and FormPipe Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, FormPipe Software 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 FormPipe Software will offset losses from the drop in FormPipe Software's long position.| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
| FormPipe Software vs. Enea AB | FormPipe Software vs. Novotek AB | FormPipe Software vs. Addnode Group AB | FormPipe Software vs. Softronic AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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