Correlation Between Solocal Group and Acheter Louer

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

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

Diversification Opportunities for Solocal Group and Acheter Louer

0.09

Correlation Coefficient

Solocal Group  Acheter Louer

Significant diversification

The 3 months correlation between Solocal and Acheter is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Solocal Group SA and Acheter Louer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acheter Louer and Solocal Group 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 Solocal Group SA are associated (or correlated) with Acheter Louer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acheter Louer has no effect on the direction of Solocal Group i.e., Solocal Group and Acheter Louer go up and down completely randomly.

Pair Corralation between Solocal Group and Acheter Louer

Assuming the 90 days trading horizon Solocal Group SA is expected to generate 0.62 times more return on investment than Acheter Louer. However, Solocal Group SA is 1.61 times less risky than Acheter Louer. It trades about 0.08 of its potential returns per unit of risk. Acheter Louer is currently generating about -0.36 per unit of risk. If you would invest  240.00  in Solocal Group SA on September 10, 2024 and sell it today you would earn a total of  15.00  from holding Solocal Group SA or generate 6.25% return on investment over 90 days.

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

Solocal Group SA  vs.  Acheter Louer

Solocal Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solocal Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Acheter Louer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acheter Louer has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Solocal Group and Acheter Louer

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

The idea behind Solocal Group SA and Acheter Louer 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.