Correlation Between Montea CVA and Sofina Socit

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

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

Diversification Opportunities for Montea CVA and Sofina Socit

0.61

Correlation Coefficient

Montea CVA  Sofina Socit

Poor diversification

The 3 months correlation between Montea and Sofina is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Montea CVA 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 Montea CVA 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 Montea CVA 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 Montea CVA i.e., Montea CVA and Sofina Socit go up and down completely randomly.

Pair Corralation between Montea CVA and Sofina Socit

Assuming the 90 days trading horizon Montea CVA is expected to generate 1.83 times less return on investment than Sofina Socit. But when comparing it to its historical volatility, Montea CVA is 1.11 times less risky than Sofina Socit. It trades about 0.07 of its potential returns per unit of risk. Sofina Socit Anonyme is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  21,720  in Sofina Socit Anonyme on December 30, 2024 and sell it today you would earn a total of  2,540  from holding Sofina Socit Anonyme or generate 11.69% return on investment over 90 days.

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

Montea CVA  vs.  Sofina Socit Anonyme

Montea CVA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Montea CVA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Montea CVA is not utilizing all of its potentials. The current 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 9 (%) 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 April 2025.

Pair Trading with Montea CVA and Sofina Socit

The main advantage of trading using opposite Montea CVA and Sofina Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montea CVA 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 Montea CVA 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.