Correlation Between Sofina Société and Carlyle

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

By analyzing existing cross correlation between Sofina Socit Anonyme and Carlyle Group, you can compare the effects of market volatilities on Sofina Société and Carlyle 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 Sofina Société with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Société and Carlyle.

Diversification Opportunities for Sofina Société and Carlyle

-0.66

Correlation Coefficient

Sofina Société  Carlyle

Excellent diversification

The 3 months correlation between Sofina and Carlyle is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Sofina Société 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 Sofina Socit Anonyme are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Sofina Société i.e., Sofina Société and Carlyle go up and down completely randomly.

Pair Corralation between Sofina Société and Carlyle

Assuming the 90 days horizon Sofina Socit Anonyme is expected to generate 0.45 times more return on investment than Carlyle. However, Sofina Socit Anonyme is 2.21 times less risky than Carlyle. It trades about 0.1 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.07 per unit of risk. If you would invest  22,900  in Sofina Socit Anonyme on December 20, 2024 and sell it today you would earn a total of  1,530  from holding Sofina Socit Anonyme or generate 6.68% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Carlyle Group

Sofina Socit Anonyme

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sofina Socit Anonyme are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sofina Société may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sofina Société and Carlyle

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

The idea behind Sofina Socit Anonyme and Carlyle Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.