Correlation Between Derichebourg and Soitec SA

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

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

Diversification Opportunities for Derichebourg and Soitec SA

0.21

Correlation Coefficient

Derichebourg  Soitec SA

Modest diversification

The 3 months correlation between Derichebourg and Soitec is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and Soitec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soitec SA and Derichebourg 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 Derichebourg are associated (or correlated) with Soitec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soitec SA has no effect on the direction of Derichebourg i.e., Derichebourg and Soitec SA go up and down completely randomly.

Pair Corralation between Derichebourg and Soitec SA

Assuming the 90 days trading horizon Derichebourg is expected to generate 0.55 times more return on investment than Soitec SA. However, Derichebourg is 1.83 times less risky than Soitec SA. It trades about -0.07 of its potential returns per unit of risk. Soitec SA is currently generating about -0.11 per unit of risk. If you would invest  509.00  in Derichebourg on August 31, 2024 and sell it today you would lose (51.00) from holding Derichebourg or give up 10.02% of portfolio value over 90 days.

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

Derichebourg  vs.  Soitec SA

Derichebourg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Derichebourg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Soitec SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soitec SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Derichebourg and Soitec SA

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

The idea behind Derichebourg and Soitec 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.