Correlation Between Soditech and Exail Technologies

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

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

Diversification Opportunities for Soditech and Exail Technologies

0.35

Correlation Coefficient

Soditech  Exail Technologies

Weak diversification

The 3 months correlation between Soditech and Exail is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Exail Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exail Technologies 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 Exail Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exail Technologies has no effect on the direction of Soditech i.e., Soditech and Exail Technologies go up and down completely randomly.

Pair Corralation between Soditech and Exail Technologies

Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Exail Technologies. In addition to that, Soditech is 1.38 times more volatile than Exail Technologies SA. It trades about -0.31 of its total potential returns per unit of risk. Exail Technologies SA is currently generating about -0.1 per unit of volatility. If you would invest  1,798  in Exail Technologies SA on September 26, 2024 and sell it today you would lose (76.00) from holding Exail Technologies SA or give up 4.23% of portfolio value over 90 days.

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

Soditech SA  vs.  Exail Technologies 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.

Exail Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exail Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exail Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Soditech and Exail Technologies

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

The idea behind Soditech SA and Exail Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.