Correlation Between Solvay SA and DEME Group
Can any of the company-specific risk be diversified away by investing in both Solvay SA and DEME 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 Solvay SA and DEME Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and DEME Group NV, you can compare the effects of market volatilities on Solvay SA and DEME 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 Solvay SA with a short position of DEME Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and DEME Group.
Diversification Opportunities for Solvay SA and DEME Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solvay and DEME is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and DEME Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEME Group NV and Solvay 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 Solvay SA are associated (or correlated) with DEME Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEME Group NV has no effect on the direction of Solvay SA i.e., Solvay SA and DEME Group go up and down completely randomly.
Pair Corralation between Solvay SA and DEME Group
Assuming the 90 days trading horizon Solvay SA is expected to under-perform the DEME Group. But the stock apears to be less risky and, when comparing its historical volatility, Solvay SA is 1.21 times less risky than DEME Group. The stock trades about -0.43 of its potential returns per unit of risk. The DEME Group NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,000 in DEME Group NV on August 24, 2024 and sell it today you would earn a total of 320.00 from holding DEME Group NV or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA vs. DEME Group NV
Performance |
| Timeline |
| Solvay SA |
| DEME Group NV |
Solvay SA and DEME Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and DEME Group
The main advantage of trading using opposite Solvay SA and DEME Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, DEME 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 DEME Group will offset losses from the drop in DEME Group's long position.| Solvay SA vs. Vastned Retail Belgium | Solvay SA vs. Keyware Technologies NV | Solvay SA vs. Retail Estates | Solvay SA vs. Ion Beam Applications |
| DEME Group vs. Compagnie d Entreprises | DEME Group vs. DIeteren Group SA | DEME Group vs. Ackermans Van Haaren | DEME Group vs. Sofina Socit Anonyme |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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