Correlation Between Booking Holdings and SOEDER SPORTFISKE

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

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

Diversification Opportunities for Booking Holdings and SOEDER SPORTFISKE

-0.59

Correlation Coefficient

Booking Holdings  SOEDER SPORTFISKE

Excellent diversification

The 3 months correlation between Booking and SOEDER is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and SOEDER SPORTFISKE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOEDER SPORTFISKE and Booking Holdings 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 Booking Holdings are associated (or correlated) with SOEDER SPORTFISKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOEDER SPORTFISKE has no effect on the direction of Booking Holdings i.e., Booking Holdings and SOEDER SPORTFISKE go up and down completely randomly.

Pair Corralation between Booking Holdings and SOEDER SPORTFISKE

Assuming the 90 days trading horizon Booking Holdings is expected to generate 0.83 times more return on investment than SOEDER SPORTFISKE. However, Booking Holdings is 1.21 times less risky than SOEDER SPORTFISKE. It trades about 0.11 of its potential returns per unit of risk. SOEDER SPORTFISKE AB is currently generating about -0.03 per unit of risk. If you would invest  445,026  in Booking Holdings on October 6, 2024 and sell it today you would earn a total of  29,974  from holding Booking Holdings or generate 6.74% return on investment over 90 days.

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

Booking Holdings  vs.  SOEDER SPORTFISKE AB

Booking Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

SOEDER SPORTFISKE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOEDER SPORTFISKE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOEDER SPORTFISKE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Booking Holdings and SOEDER SPORTFISKE

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

The idea behind Booking Holdings and SOEDER SPORTFISKE AB 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.