Correlation Between Sogeclair and Hotel Majestic

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

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

Diversification Opportunities for Sogeclair and Hotel Majestic

0.68

Correlation Coefficient

Sogeclair  Hotel Majestic

Poor diversification

The 3 months correlation between Sogeclair and Hotel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sogeclair SA and Hotel Majestic Cannes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Majestic Cannes 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 Hotel Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Majestic Cannes has no effect on the direction of Sogeclair i.e., Sogeclair and Hotel Majestic go up and down completely randomly.

Pair Corralation between Sogeclair and Hotel Majestic

Assuming the 90 days trading horizon Sogeclair SA is expected to under-perform the Hotel Majestic. In addition to that, Sogeclair is 1.23 times more volatile than Hotel Majestic Cannes. It trades about -0.07 of its total potential returns per unit of risk. Hotel Majestic Cannes is currently generating about -0.04 per unit of volatility. If you would invest  545,000  in Hotel Majestic Cannes on September 12, 2024 and sell it today you would lose (25,000) from holding Hotel Majestic Cannes or give up 4.59% of portfolio value over 90 days.

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

Sogeclair SA  vs.  Hotel Majestic Cannes

Sogeclair SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sogeclair SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Hotel Majestic Cannes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sogeclair and Hotel Majestic

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

The idea behind Sogeclair SA and Hotel Majestic Cannes 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.