Correlation Between Keyware Technologies and Sofina Socit

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

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

Diversification Opportunities for Keyware Technologies and Sofina Socit

-0.19

Correlation Coefficient

Keyware Technologies  Sofina Socit

Good diversification

The 3 months correlation between Keyware and Sofina is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Keyware Technologies NV 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 Keyware 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 Keyware Technologies NV 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 Keyware Technologies i.e., Keyware Technologies and Sofina Socit go up and down completely randomly.

Pair Corralation between Keyware Technologies and Sofina Socit

Assuming the 90 days trading horizon Keyware Technologies NV is expected to under-perform the Sofina Socit. In addition to that, Keyware Technologies is 1.5 times more volatile than Sofina Socit Anonyme. It trades about -0.01 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  21,840  in Sofina Socit Anonyme on December 31, 2024 and sell it today you would earn a total of  2,420  from holding Sofina Socit Anonyme or generate 11.08% return on investment over 90 days.

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

Keyware Technologies NV  vs.  Sofina Socit Anonyme

Keyware Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keyware Technologies NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Keyware Technologies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 May 2025.

Pair Trading with Keyware Technologies and Sofina Socit

The main advantage of trading using opposite Keyware Technologies and Sofina Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyware Technologies 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 Keyware Technologies NV 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.