Correlation Between Exponent and SOS

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

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

Diversification Opportunities for Exponent and SOS

0.65

Correlation Coefficient

Exponent  SOS

Poor diversification

The 3 months correlation between Exponent and SOS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and SOS Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS Limited and Exponent 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 Exponent 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 Exponent i.e., Exponent and SOS go up and down completely randomly.

Pair Corralation between Exponent and SOS

Given the investment horizon of 90 days Exponent is expected to generate 0.21 times more return on investment than SOS. However, Exponent is 4.68 times less risky than SOS. It trades about -0.43 of its potential returns per unit of risk. SOS Limited is currently generating about -0.49 per unit of risk. If you would invest  9,842  in Exponent on September 29, 2024 and sell it today you would lose (899.00) from holding Exponent or give up 9.13% of portfolio value over 90 days.

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

Exponent  vs.  SOS Limited

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Exponent and SOS

The main advantage of trading using opposite Exponent and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent 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 Exponent 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.

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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 Directory module to find actively traded commodities issued by global exchanges.