Correlation Between Soditech and Foncire Volta

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

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

Diversification Opportunities for Soditech and Foncire Volta

-0.16

Correlation Coefficient

Soditech  Foncire Volta

Good diversification

The 3 months correlation between Soditech and Foncire is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Foncire Volta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foncire Volta 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 Foncire Volta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foncire Volta has no effect on the direction of Soditech i.e., Soditech and Foncire Volta go up and down completely randomly.

Pair Corralation between Soditech and Foncire Volta

Assuming the 90 days trading horizon Soditech is expected to generate 2.65 times less return on investment than Foncire Volta. In addition to that, Soditech is 2.39 times more volatile than Foncire Volta. It trades about 0.03 of its total potential returns per unit of risk. Foncire Volta is currently generating about 0.18 per unit of volatility. If you would invest  765.00  in Foncire Volta on December 3, 2024 and sell it today you would earn a total of  180.00  from holding Foncire Volta or generate 23.53% return on investment over 90 days.

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

Soditech SA  vs.  Foncire Volta

Soditech SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Soditech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Foncire Volta

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foncire Volta are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Foncire Volta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soditech and Foncire Volta

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

The idea behind Soditech SA and Foncire Volta 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.