Correlation Between Soditech and Deezer SA

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

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

Diversification Opportunities for Soditech and Deezer SA

0.45

Correlation Coefficient

Soditech  Deezer SA

Very weak diversification

The 3 months correlation between Soditech and Deezer is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Deezer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deezer 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 Deezer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deezer SA has no effect on the direction of Soditech i.e., Soditech and Deezer SA go up and down completely randomly.

Pair Corralation between Soditech and Deezer SA

Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Deezer SA. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 1.13 times less risky than Deezer SA. The stock trades about -0.32 of its potential returns per unit of risk. The Deezer SA is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Deezer SA on September 28, 2024 and sell it today you would lose (14.00) from holding Deezer SA or give up 9.93% 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.  Deezer SA

Soditech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soditech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Deezer SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deezer SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Soditech and Deezer SA

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

The idea behind Soditech SA and Deezer 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.