Correlation Between Soditech and Avenir Telecom
Can any of the company-specific risk be diversified away by investing in both Soditech and Avenir Telecom 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 Soditech and Avenir Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Avenir Telecom SA, you can compare the effects of market volatilities on Soditech and Avenir Telecom 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 Soditech with a short position of Avenir Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Avenir Telecom.
Diversification Opportunities for Soditech and Avenir Telecom
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Soditech and Avenir is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Avenir Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenir Telecom SA and Soditech 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 Soditech SA are associated (or correlated) with Avenir Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenir Telecom SA has no effect on the direction of Soditech i.e., Soditech and Avenir Telecom go up and down completely randomly.
Pair Corralation between Soditech and Avenir Telecom
Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Avenir Telecom. In addition to that, Soditech is 1.09 times more volatile than Avenir Telecom SA. It trades about -0.31 of its total potential returns per unit of risk. Avenir Telecom SA is currently generating about -0.27 per unit of volatility. If you would invest 7.57 in Avenir Telecom SA on September 26, 2024 and sell it today you would lose (1.05) from holding Avenir Telecom SA or give up 13.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Soditech SA vs. Avenir Telecom SA
Performance |
Timeline |
Soditech SA |
Avenir Telecom SA |
Soditech and Avenir Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Soditech and Avenir Telecom
The main advantage of trading using opposite Soditech and Avenir Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Avenir Telecom 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 Avenir Telecom will offset losses from the drop in Avenir Telecom's long position.Soditech vs. Bouygues SA | Soditech vs. Legrand SA | Soditech vs. Compagnie de Saint Gobain | Soditech vs. Sodexo SA |
Avenir Telecom vs. Acheter Louer | Avenir Telecom vs. Europlasma SA | Avenir Telecom vs. DBT SA | Avenir Telecom vs. Solocal Group SA |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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