Correlation Between SPIE SA and Soditech
Can any of the company-specific risk be diversified away by investing in both SPIE SA and Soditech 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 SPIE SA and Soditech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPIE SA and Soditech SA, you can compare the effects of market volatilities on SPIE SA and Soditech 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 SPIE SA with a short position of Soditech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPIE SA and Soditech.
Diversification Opportunities for SPIE SA and Soditech
Average diversification
The 3 months correlation between SPIE and Soditech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SPIE SA and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and SPIE 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 SPIE SA are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of SPIE SA i.e., SPIE SA and Soditech go up and down completely randomly.
Pair Corralation between SPIE SA and Soditech
Assuming the 90 days trading horizon SPIE SA is expected to generate 2.37 times less return on investment than Soditech. But when comparing it to its historical volatility, SPIE SA is 4.26 times less risky than Soditech. It trades about 0.05 of its potential returns per unit of risk. Soditech SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Soditech SA on September 12, 2024 and sell it today you would lose (12.00) from holding Soditech SA or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
SPIE SA vs. Soditech SA
Performance |
| Timeline |
| SPIE SA |
| Soditech SA |
SPIE SA and Soditech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPIE SA and Soditech
The main advantage of trading using opposite SPIE SA and Soditech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPIE SA position performs unexpectedly, Soditech 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 Soditech will offset losses from the drop in Soditech's long position.The idea behind SPIE SA and Soditech SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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