Correlation Between SOGECLAIR and Volkswagen

Can any of the company-specific risk be diversified away by investing in both SOGECLAIR and Volkswagen 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 Volkswagen 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 Volkswagen AG VZO, you can compare the effects of market volatilities on SOGECLAIR and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOGECLAIR and Volkswagen.

Diversification Opportunities for SOGECLAIR and Volkswagen

0.72

Correlation Coefficient

SOGECLAIR  Volkswagen

Poor diversification

The 3 months correlation between SOGECLAIR and Volkswagen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SOGECLAIR SA INH and Volkswagen AG VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG VZO 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG VZO has no effect on the direction of SOGECLAIR i.e., SOGECLAIR and Volkswagen go up and down completely randomly.

Pair Corralation between SOGECLAIR and Volkswagen

Assuming the 90 days horizon SOGECLAIR SA INH is expected to generate 2.13 times more return on investment than Volkswagen. However, SOGECLAIR is 2.13 times more volatile than Volkswagen AG VZO. It trades about 0.16 of its potential returns per unit of risk. Volkswagen AG VZO is currently generating about 0.13 per unit of risk. If you would invest  1,720  in SOGECLAIR SA INH on December 26, 2024 and sell it today you would earn a total of  720.00  from holding SOGECLAIR SA INH or generate 41.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SOGECLAIR SA INH  vs.  Volkswagen AG VZO

SOGECLAIR SA INH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SOGECLAIR SA INH are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOGECLAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Volkswagen AG VZO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG VZO are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Volkswagen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOGECLAIR and Volkswagen

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

The idea behind SOGECLAIR SA INH and Volkswagen AG VZO 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.