Correlation Between Pentair Plc and SOEDER SPORTFISKE

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

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

Diversification Opportunities for Pentair Plc and SOEDER SPORTFISKE

-0.61

Correlation Coefficient

Pentair Plc  SOEDER SPORTFISKE

Excellent diversification

The 3 months correlation between Pentair and SOEDER is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and SOEDER SPORTFISKE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOEDER SPORTFISKE and Pentair Plc 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 Pentair plc 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 Pentair Plc i.e., Pentair Plc and SOEDER SPORTFISKE go up and down completely randomly.

Pair Corralation between Pentair Plc and SOEDER SPORTFISKE

Assuming the 90 days horizon Pentair plc is expected to under-perform the SOEDER SPORTFISKE. But the stock apears to be less risky and, when comparing its historical volatility, Pentair plc is 2.09 times less risky than SOEDER SPORTFISKE. The stock trades about -0.27 of its potential returns per unit of risk. The SOEDER SPORTFISKE AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  221.00  in SOEDER SPORTFISKE AB on December 11, 2024 and sell it today you would earn a total of  54.00  from holding SOEDER SPORTFISKE AB or generate 24.43% return on investment over 90 days.

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

Pentair plc  vs.  SOEDER SPORTFISKE AB

Pentair plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentair plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SOEDER SPORTFISKE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOEDER SPORTFISKE AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOEDER SPORTFISKE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentair Plc and SOEDER SPORTFISKE

The main advantage of trading using opposite Pentair Plc and SOEDER SPORTFISKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc 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 Pentair plc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.