Correlation Between Rubis SCA and Solocal Group

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

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

Diversification Opportunities for Rubis SCA and Solocal Group

-0.61

Correlation Coefficient

Rubis SCA  Solocal Group

Excellent diversification

The 3 months correlation between Rubis and Solocal is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group SA and Rubis SCA 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 Rubis SCA are associated (or correlated) with Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Rubis SCA i.e., Rubis SCA and Solocal Group go up and down completely randomly.

Pair Corralation between Rubis SCA and Solocal Group

Assuming the 90 days trading horizon Rubis SCA is expected to generate 2.34 times less return on investment than Solocal Group. But when comparing it to its historical volatility, Rubis SCA is 2.96 times less risky than Solocal Group. It trades about 0.18 of its potential returns per unit of risk. Solocal Group SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Solocal Group SA on December 4, 2024 and sell it today you would earn a total of  21.00  from holding Solocal Group SA or generate 10.55% return on investment over 90 days.

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

Rubis SCA  vs.  Solocal Group SA

Rubis SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Rubis SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Solocal Group SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rubis SCA and Solocal Group

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

The idea behind Rubis SCA and Solocal Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.