Correlation Between Sofina Société and Patria Investments

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

Diversification Opportunities for Sofina Société and Patria Investments

-0.63

Correlation Coefficient

Sofina Société  Patria Investments

Excellent diversification

The 3 months correlation between Sofina and Patria is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Sofina Société i.e., Sofina Société and Patria Investments go up and down completely randomly.

Pair Corralation between Sofina Société and Patria Investments

Assuming the 90 days horizon Sofina Socit Anonyme is not expected to generate positive returns. However, Sofina Socit Anonyme is 25.6 times less risky than Patria Investments. It waists most of its returns potential to compensate for thr risk taken. Patria Investments is generating about 0.06 per unit of risk. If you would invest  1,099  in Patria Investments on October 23, 2024 and sell it today you would earn a total of  66.00  from holding Patria Investments or generate 6.01% 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.  Patria Investments

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.

Patria Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sofina Société and Patria Investments

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

The idea behind Sofina Socit Anonyme and Patria Investments 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.