Correlation Between Soditech and SQLI SA

Can any of the company-specific risk be diversified away by investing in both Soditech and SQLI 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 SQLI 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 SQLI SA, you can compare the effects of market volatilities on Soditech and SQLI 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 SQLI SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and SQLI SA.

Diversification Opportunities for Soditech and SQLI SA

-0.13

Correlation Coefficient

Soditech  SQLI SA

Good diversification

The 3 months correlation between Soditech and SQLI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and SQLI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQLI 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 SQLI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQLI SA has no effect on the direction of Soditech i.e., Soditech and SQLI SA go up and down completely randomly.

Pair Corralation between Soditech and SQLI SA

Assuming the 90 days trading horizon Soditech is expected to generate 14.08 times less return on investment than SQLI SA. But when comparing it to its historical volatility, Soditech SA is 1.29 times less risky than SQLI SA. It trades about 0.01 of its potential returns per unit of risk. SQLI SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,020  in SQLI SA on September 3, 2024 and sell it today you would earn a total of  1,380  from holding SQLI SA or generate 34.33% 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.  SQLI 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 somewhat strong fundamental indicators, Soditech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SQLI SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SQLI SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, SQLI SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soditech and SQLI SA

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

The idea behind Soditech SA and SQLI 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.