Correlation Between Selectirente and Soc Centrale

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

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

Diversification Opportunities for Selectirente and Soc Centrale

-0.71

Correlation Coefficient

Selectirente  Soc Centrale

Pay attention - limited upside

The 3 months correlation between Selectirente and Soc is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Selectirente and Soc Centrale Bois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soc Centrale Bois and Selectirente 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 Selectirente are associated (or correlated) with Soc Centrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soc Centrale Bois has no effect on the direction of Selectirente i.e., Selectirente and Soc Centrale go up and down completely randomly.

Pair Corralation between Selectirente and Soc Centrale

Assuming the 90 days trading horizon Selectirente is expected to under-perform the Soc Centrale. But the stock apears to be less risky and, when comparing its historical volatility, Selectirente is 4.34 times less risky than Soc Centrale. The stock trades about -0.16 of its potential returns per unit of risk. The Soc Centrale Bois is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  814.00  in Soc Centrale Bois on December 3, 2024 and sell it today you would earn a total of  46.00  from holding Soc Centrale Bois or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Selectirente  vs.  Soc Centrale Bois

Selectirente

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selectirente has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Selectirente is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Soc Centrale Bois

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Soc Centrale Bois are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soc Centrale may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Selectirente and Soc Centrale

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

The idea behind Selectirente and Soc Centrale Bois 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.