Correlation Between Ryanair Holdings and SOGECLAIR

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

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

Diversification Opportunities for Ryanair Holdings and SOGECLAIR

-0.33

Correlation Coefficient

Ryanair Holdings  SOGECLAIR

Very good diversification

The 3 months correlation between Ryanair and SOGECLAIR is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH and Ryanair 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 Ryanair Holdings plc are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and SOGECLAIR go up and down completely randomly.

Pair Corralation between Ryanair Holdings and SOGECLAIR

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 0.72 times more return on investment than SOGECLAIR. However, Ryanair Holdings plc is 1.38 times less risky than SOGECLAIR. It trades about 0.21 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about -0.01 per unit of risk. If you would invest  1,620  in Ryanair Holdings plc on September 17, 2024 and sell it today you would earn a total of  355.00  from holding Ryanair Holdings plc or generate 21.91% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  SOGECLAIR SA INH

Ryanair Holdings plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Ryanair Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ryanair Holdings and SOGECLAIR

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

The idea behind Ryanair Holdings plc and SOGECLAIR SA INH 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.