Correlation Between SOGECLAIR and Nike

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

By analyzing existing cross correlation between SOGECLAIR SA INH and Nike Inc, you can compare the effects of market volatilities on SOGECLAIR and Nike 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 SOGECLAIR with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOGECLAIR and Nike.

Diversification Opportunities for SOGECLAIR and Nike

-0.22

Correlation Coefficient

SOGECLAIR  Nike

Very good diversification

The 3 months correlation between SOGECLAIR and Nike is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SOGECLAIR SA INH and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and SOGECLAIR 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 SOGECLAIR SA INH are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of SOGECLAIR i.e., SOGECLAIR and Nike go up and down completely randomly.

Pair Corralation between SOGECLAIR and Nike

Assuming the 90 days horizon SOGECLAIR SA INH is expected to generate 1.14 times more return on investment than Nike. However, SOGECLAIR is 1.14 times more volatile than Nike Inc. It trades about 0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.04 per unit of risk. If you would invest  1,771  in SOGECLAIR SA INH on October 10, 2024 and sell it today you would earn a total of  259.00  from holding SOGECLAIR SA INH or generate 14.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

SOGECLAIR SA INH  vs.  Nike Inc

SOGECLAIR SA INH

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOGECLAIR SA INH are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOGECLAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SOGECLAIR and Nike

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

The idea behind SOGECLAIR SA INH and Nike Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.