Correlation Between Softronic and Precise Biometrics
Can any of the company-specific risk be diversified away by investing in both Softronic and Precise Biometrics 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 Precise Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Precise Biometrics AB, you can compare the effects of market volatilities on Softronic and Precise Biometrics 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 Precise Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Precise Biometrics.
Diversification Opportunities for Softronic and Precise Biometrics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Softronic and Precise is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics 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 Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Softronic i.e., Softronic and Precise Biometrics go up and down completely randomly.
Pair Corralation between Softronic and Precise Biometrics
Assuming the 90 days trading horizon Softronic is expected to generate 6.17 times less return on investment than Precise Biometrics. But when comparing it to its historical volatility, Softronic AB is 3.8 times less risky than Precise Biometrics. It trades about 0.03 of its potential returns per unit of risk. Precise Biometrics AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 349.00 in Precise Biometrics AB on August 24, 2024 and sell it today you would earn a total of 132.00 from holding Precise Biometrics AB or generate 37.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Precise Biometrics AB
Performance |
| Timeline |
| Softronic AB |
| Precise Biometrics |
Softronic and Precise Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Precise Biometrics
The main advantage of trading using opposite Softronic and Precise Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Precise Biometrics 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 Precise Biometrics will offset losses from the drop in Precise Biometrics' long position.| Softronic vs. Novotek AB | Softronic vs. Svedbergs i Dalstorp | Softronic vs. Know IT AB | Softronic vs. FormPipe Software AB |
| Precise Biometrics vs. Enea AB | Precise Biometrics vs. Novotek AB | Precise Biometrics vs. Addnode Group AB | Precise Biometrics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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