Correlation Between Neoen SA and Soitec SA

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

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

Diversification Opportunities for Neoen SA and Soitec SA

-0.44

Correlation Coefficient

Neoen SA  Soitec SA

Very good diversification

The 3 months correlation between Neoen and Soitec is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and Soitec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soitec SA and Neoen SA 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 Neoen SA are associated (or correlated) with Soitec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soitec SA has no effect on the direction of Neoen SA i.e., Neoen SA and Soitec SA go up and down completely randomly.

Pair Corralation between Neoen SA and Soitec SA

Assuming the 90 days trading horizon Neoen SA is expected to generate 0.66 times more return on investment than Soitec SA. However, Neoen SA is 1.52 times less risky than Soitec SA. It trades about 0.03 of its potential returns per unit of risk. Soitec SA is currently generating about -0.02 per unit of risk. If you would invest  3,297  in Neoen SA on September 27, 2024 and sell it today you would earn a total of  657.00  from holding Neoen SA or generate 19.93% return on investment over 90 days.

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

Neoen SA  vs.  Soitec SA

Neoen SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neoen SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Neoen SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Soitec SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soitec SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Neoen SA and Soitec SA

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

The idea behind Neoen SA and Soitec 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .