Correlation Between Poulaillon and Solocal Group

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

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

Diversification Opportunities for Poulaillon and Solocal Group

-0.35

Correlation Coefficient

Poulaillon  Solocal Group

Very good diversification

The 3 months correlation between Poulaillon and Solocal is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Poulaillon SA and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group SA and Poulaillon 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 Poulaillon SA are associated (or correlated) with Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Poulaillon i.e., Poulaillon and Solocal Group go up and down completely randomly.

Pair Corralation between Poulaillon and Solocal Group

Assuming the 90 days trading horizon Poulaillon SA is expected to generate 0.62 times more return on investment than Solocal Group. However, Poulaillon SA is 1.61 times less risky than Solocal Group. It trades about 0.01 of its potential returns per unit of risk. Solocal Group SA is currently generating about 0.0 per unit of risk. If you would invest  560.00  in Poulaillon SA on September 5, 2024 and sell it today you would lose (5.00) from holding Poulaillon SA or give up 0.89% of portfolio value over 90 days.

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

Poulaillon SA  vs.  Solocal Group SA

Poulaillon SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poulaillon SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Poulaillon is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Solocal Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solocal Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Solocal Group is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Poulaillon and Solocal Group

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

The idea behind Poulaillon SA and Solocal Group 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.