Correlation Between Solvay SA and Elia Group
Can any of the company-specific risk be diversified away by investing in both Solvay SA and Elia 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 Elia 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 Elia Group SANV, you can compare the effects of market volatilities on Solvay SA and Elia 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 Elia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Elia Group.
Diversification Opportunities for Solvay SA and Elia Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solvay and Elia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV 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 Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of Solvay SA i.e., Solvay SA and Elia Group go up and down completely randomly.
Pair Corralation between Solvay SA and Elia Group
Assuming the 90 days trading horizon Solvay SA is expected to generate 1.3 times more return on investment than Elia Group. However, Solvay SA is 1.3 times more volatile than Elia Group SANV. It trades about 0.09 of its potential returns per unit of risk. Elia Group SANV is currently generating about -0.05 per unit of risk. If you would invest 1,411 in Solvay SA on August 26, 2024 and sell it today you would earn a total of 1,714 from holding Solvay SA or generate 121.47% 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. Elia Group SANV
Performance |
| Timeline |
| Solvay SA |
| Elia Group SANV |
Solvay SA and Elia Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Elia Group
The main advantage of trading using opposite Solvay SA and Elia Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, Elia 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 Elia Group will offset losses from the drop in Elia Group's long position.| Solvay SA vs. Ackermans Van Haaren | Solvay SA vs. NV Bekaert SA | Solvay SA vs. Groep Brussel Lambert | Solvay SA vs. Tubize Fin |
| Elia Group vs. Ackermans Van Haaren | Elia Group vs. Groep Brussel Lambert | Elia Group vs. Sofina Socit Anonyme | Elia Group vs. ageas SANV |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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