Correlation Between Sofina Société and Marygold Companies

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

Diversification Opportunities for Sofina Société and Marygold Companies

-0.03

Correlation Coefficient

Sofina Société  Marygold Companies

Good diversification

The 3 months correlation between Sofina and Marygold is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Marygold Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marygold Companies 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 Marygold Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marygold Companies has no effect on the direction of Sofina Société i.e., Sofina Société and Marygold Companies go up and down completely randomly.

Pair Corralation between Sofina Société and Marygold Companies

Assuming the 90 days horizon Sofina Socit Anonyme is not expected to generate positive returns. However, Sofina Socit Anonyme is 123.15 times less risky than Marygold Companies. It waists most of its returns potential to compensate for thr risk taken. Marygold Companies is generating about 0.07 per unit of risk. If you would invest  147.00  in Marygold Companies on October 22, 2024 and sell it today you would earn a total of  24.00  from holding Marygold Companies or generate 16.33% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Marygold Companies

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sofina Société is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Marygold Companies

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marygold Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent essential indicators, Marygold Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofina Société and Marygold Companies

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

The idea behind Sofina Socit Anonyme and Marygold Companies 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.