Correlation Between Poxel SA and Soitec SA

Can any of the company-specific risk be diversified away by investing in both Poxel 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 Poxel 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 Poxel SA and Soitec SA, you can compare the effects of market volatilities on Poxel 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 Poxel SA with a short position of Soitec SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poxel SA and Soitec SA.

Diversification Opportunities for Poxel SA and Soitec SA

-0.41

Correlation Coefficient

Poxel SA  Soitec SA

Very good diversification

The 3 months correlation between Poxel and Soitec is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Poxel SA and Soitec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soitec SA and Poxel 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 Poxel 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 Poxel SA i.e., Poxel SA and Soitec SA go up and down completely randomly.

Pair Corralation between Poxel SA and Soitec SA

Assuming the 90 days trading horizon Poxel SA is expected to generate 2.96 times more return on investment than Soitec SA. However, Poxel SA is 2.96 times more volatile than Soitec SA. It trades about 0.2 of its potential returns per unit of risk. Soitec SA is currently generating about 0.02 per unit of risk. If you would invest  13.00  in Poxel SA on October 15, 2024 and sell it today you would earn a total of  4.00  from holding Poxel SA or generate 30.77% return on investment over 90 days.

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

Poxel SA  vs.  Soitec SA

Poxel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poxel SA 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Soitec SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soitec SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Soitec SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Poxel SA and Soitec SA

The main advantage of trading using opposite Poxel SA and Soitec SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poxel 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 Poxel 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.