Correlation Between SoftBank Group and Sydbank

Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Sydbank 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 SoftBank Group and Sydbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoftBank Group Corp and Sydbank, you can compare the effects of market volatilities on SoftBank Group and Sydbank 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 SoftBank Group with a short position of Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Sydbank.

Diversification Opportunities for SoftBank Group and Sydbank

0.58

Correlation Coefficient

SoftBank Group  Sydbank

Very weak diversification

The 3 months correlation between SoftBank and Sydbank is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of SoftBank Group i.e., SoftBank Group and Sydbank go up and down completely randomly.

Pair Corralation between SoftBank Group and Sydbank

Assuming the 90 days trading horizon SoftBank Group is expected to generate 10.86 times less return on investment than Sydbank. In addition to that, SoftBank Group is 1.38 times more volatile than Sydbank. It trades about 0.01 of its total potential returns per unit of risk. Sydbank is currently generating about 0.1 per unit of volatility. If you would invest  33,900  in Sydbank on October 21, 2024 and sell it today you would earn a total of  4,040  from holding Sydbank or generate 11.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

SoftBank Group Corp  vs.  Sydbank

SoftBank Group Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftBank Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SoftBank Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sydbank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sydbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SoftBank Group and Sydbank

The main advantage of trading using opposite SoftBank Group and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.

The idea behind SoftBank Group Corp and Sydbank 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.