Correlation Between Solvac SA and DEME Group
Can any of the company-specific risk be diversified away by investing in both Solvac 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 Solvac 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 Solvac SA and DEME Group NV, you can compare the effects of market volatilities on Solvac 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 Solvac SA with a short position of DEME Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvac SA and DEME Group.
Diversification Opportunities for Solvac SA and DEME Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solvac and DEME is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Solvac 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 Solvac 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 Solvac 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 Solvac SA i.e., Solvac SA and DEME Group go up and down completely randomly.
Pair Corralation between Solvac SA and DEME Group
Assuming the 90 days trading horizon Solvac SA is expected to under-perform the DEME Group. But the stock apears to be less risky and, when comparing its historical volatility, Solvac SA is 2.52 times less risky than DEME Group. The stock trades about -0.03 of its potential returns per unit of risk. The DEME Group NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,780 in DEME Group NV on September 4, 2024 and sell it today you would earn a total of 820.00 from holding DEME Group NV or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvac SA vs. DEME Group NV
Performance |
| Timeline |
| Solvac SA |
| DEME Group NV |
Solvac SA and DEME Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvac SA and DEME Group
The main advantage of trading using opposite Solvac SA and DEME Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvac 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.The idea behind Solvac SA and DEME Group 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.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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