Correlation Between Care Property and Sofina Socit

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

By analyzing existing cross correlation between Care Property Invest and Sofina Socit Anonyme, you can compare the effects of market volatilities on Care Property and Sofina Socit 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 Care Property with a short position of Sofina Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Care Property and Sofina Socit.

Diversification Opportunities for Care Property and Sofina Socit

-0.34

Correlation Coefficient

Care Property  Sofina Socit

Very good diversification

The 3 months correlation between Care and Sofina is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme and Care Property 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 Care Property Invest are associated (or correlated) with Sofina Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of Care Property i.e., Care Property and Sofina Socit go up and down completely randomly.

Pair Corralation between Care Property and Sofina Socit

Assuming the 90 days trading horizon Care Property Invest is expected to under-perform the Sofina Socit. In addition to that, Care Property is 1.13 times more volatile than Sofina Socit Anonyme. It trades about -0.04 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about 0.11 per unit of volatility. If you would invest  21,920  in Sofina Socit Anonyme on December 2, 2024 and sell it today you would earn a total of  1,820  from holding Sofina Socit Anonyme or generate 8.3% return on investment over 90 days.

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

Care Property Invest  vs.  Sofina Socit Anonyme

Care Property Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Care Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sofina Socit Anonyme

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sofina Socit Anonyme are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Sofina Socit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Care Property and Sofina Socit

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

The idea behind Care Property Invest and Sofina Socit Anonyme 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.