Correlation Between Sogeclair and Broadpeak

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

By analyzing existing cross correlation between Sogeclair SA and Broadpeak SA, you can compare the effects of market volatilities on Sogeclair and Broadpeak 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 Broadpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sogeclair and Broadpeak.

Diversification Opportunities for Sogeclair and Broadpeak

0.77

Correlation Coefficient

Sogeclair  Broadpeak

Poor diversification

The 3 months correlation between Sogeclair and Broadpeak is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sogeclair SA and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA 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 are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Sogeclair i.e., Sogeclair and Broadpeak go up and down completely randomly.

Pair Corralation between Sogeclair and Broadpeak

Assuming the 90 days trading horizon Sogeclair SA is expected to generate 0.65 times more return on investment than Broadpeak. However, Sogeclair SA is 1.55 times less risky than Broadpeak. It trades about 0.24 of its potential returns per unit of risk. Broadpeak SA is currently generating about 0.08 per unit of risk. If you would invest  1,725  in Sogeclair SA on December 30, 2024 and sell it today you would earn a total of  745.00  from holding Sogeclair SA or generate 43.19% return on investment over 90 days.

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

Sogeclair SA  vs.  Broadpeak SA

Sogeclair SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sogeclair SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sogeclair reported solid returns over the last few months and may actually be approaching a breakup point.

Broadpeak SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Broadpeak SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Broadpeak reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sogeclair and Broadpeak

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

The idea behind Sogeclair SA and Broadpeak 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.