Correlation Between Softimat and Miko NV
Can any of the company-specific risk be diversified away by investing in both Softimat and Miko NV 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 Softimat and Miko NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softimat SA and Miko NV, you can compare the effects of market volatilities on Softimat and Miko NV 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 Softimat with a short position of Miko NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softimat and Miko NV.
Diversification Opportunities for Softimat and Miko NV
Excellent diversification
The 3 months correlation between Softimat and Miko is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Softimat SA and Miko NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miko NV and Softimat 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 Softimat SA are associated (or correlated) with Miko NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miko NV has no effect on the direction of Softimat i.e., Softimat and Miko NV go up and down completely randomly.
Pair Corralation between Softimat and Miko NV
Assuming the 90 days trading horizon Softimat SA is expected to generate 2.08 times more return on investment than Miko NV. However, Softimat is 2.08 times more volatile than Miko NV. It trades about -0.01 of its potential returns per unit of risk. Miko NV is currently generating about -0.03 per unit of risk. If you would invest 160.00 in Softimat SA on September 12, 2024 and sell it today you would lose (65.00) from holding Softimat SA or give up 40.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.1% |
| Values | Daily Returns |
Softimat SA vs. Miko NV
Performance |
| Timeline |
| Softimat SA |
| Miko NV |
Softimat and Miko NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softimat and Miko NV
The main advantage of trading using opposite Softimat and Miko NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softimat position performs unexpectedly, Miko NV 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 Miko NV will offset losses from the drop in Miko NV's long position.The idea behind Softimat SA and Miko NV 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.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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