Correlation Between Union Technologies and Soditech

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

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

Diversification Opportunities for Union Technologies and Soditech

0.22

Correlation Coefficient

Union Technologies  Soditech

Modest diversification

The 3 months correlation between Union and Soditech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Union Technologies Informatiqu and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Union Technologies 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 Union Technologies Informatique are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Union Technologies i.e., Union Technologies and Soditech go up and down completely randomly.

Pair Corralation between Union Technologies and Soditech

Assuming the 90 days trading horizon Union Technologies is expected to generate 2.34 times less return on investment than Soditech. In addition to that, Union Technologies is 1.3 times more volatile than Soditech SA. It trades about 0.07 of its total potential returns per unit of risk. Soditech SA is currently generating about 0.22 per unit of volatility. If you would invest  104.00  in Soditech SA on October 25, 2024 and sell it today you would earn a total of  19.00  from holding Soditech SA or generate 18.27% return on investment over 90 days.

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

Union Technologies Informatiqu  vs.  Soditech SA

Union Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Technologies Informatique are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Union Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Soditech SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Union Technologies and Soditech

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

The idea behind Union Technologies Informatique and Soditech 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.