Correlation Between Soitec SA and VEOM Group
Can any of the company-specific risk be diversified away by investing in both Soitec SA and VEOM Group 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 Soitec SA and VEOM Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soitec SA and VEOM Group SA, you can compare the effects of market volatilities on Soitec SA and VEOM Group 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 Soitec SA with a short position of VEOM Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soitec SA and VEOM Group.
Diversification Opportunities for Soitec SA and VEOM Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Soitec and VEOM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Soitec SA and VEOM Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEOM Group SA and Soitec SA 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 Soitec SA are associated (or correlated) with VEOM Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEOM Group SA has no effect on the direction of Soitec SA i.e., Soitec SA and VEOM Group go up and down completely randomly.
Pair Corralation between Soitec SA and VEOM Group
Assuming the 90 days trading horizon Soitec SA is expected to generate 0.47 times more return on investment than VEOM Group. However, Soitec SA is 2.11 times less risky than VEOM Group. It trades about 0.1 of its potential returns per unit of risk. VEOM Group SA is currently generating about 0.04 per unit of risk. If you would invest 7,030 in Soitec SA on November 4, 2024 and sell it today you would earn a total of 1,450 from holding Soitec SA or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soitec SA vs. VEOM Group SA
Performance |
| Timeline |
| Soitec SA |
| VEOM Group SA |
Soitec SA and VEOM Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soitec SA and VEOM Group
The main advantage of trading using opposite Soitec SA and VEOM Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soitec SA position performs unexpectedly, VEOM Group 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 VEOM Group will offset losses from the drop in VEOM Group's long position.| Soitec SA vs. Vallourec | Soitec SA vs. Dassault Systemes SE | Soitec SA vs. Teleperformance SE | Soitec SA vs. Atos SE |
| VEOM Group vs. Seche Environnem | VEOM Group vs. Pullup Entertainment Socit | VEOM Group vs. Broadpeak SA | VEOM Group vs. Netmedia Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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