Correlation Between Euronet Worldwide and SOS

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

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

Diversification Opportunities for Euronet Worldwide and SOS

-0.63

Correlation Coefficient

Euronet Worldwide  SOS

Excellent diversification

The 3 months correlation between Euronet and SOS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and SOS Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS Limited and Euronet Worldwide 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 Euronet Worldwide are associated (or correlated) with SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS Limited has no effect on the direction of Euronet Worldwide i.e., Euronet Worldwide and SOS go up and down completely randomly.

Pair Corralation between Euronet Worldwide and SOS

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 0.1 times more return on investment than SOS. However, Euronet Worldwide is 9.55 times less risky than SOS. It trades about 0.02 of its potential returns per unit of risk. SOS Limited is currently generating about -0.09 per unit of risk. If you would invest  10,162  in Euronet Worldwide on September 19, 2024 and sell it today you would earn a total of  36.00  from holding Euronet Worldwide or generate 0.35% return on investment over 90 days.

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

Euronet Worldwide  vs.  SOS Limited

Euronet Worldwide

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SOS Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOS Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SOS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Euronet Worldwide and SOS

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

The idea behind Euronet Worldwide and SOS Limited 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.