Correlation Between Saule Technologies and IMC SA

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

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

Diversification Opportunities for Saule Technologies and IMC SA

0.88

Correlation Coefficient

Saule Technologies  IMC SA

Very poor diversification

The 3 months correlation between Saule and IMC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Saule Technologies SA and IMC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMC SA and Saule Technologies 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 Saule Technologies SA are associated (or correlated) with IMC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMC SA has no effect on the direction of Saule Technologies i.e., Saule Technologies and IMC SA go up and down completely randomly.

Pair Corralation between Saule Technologies and IMC SA

Assuming the 90 days trading horizon Saule Technologies is expected to generate 1.52 times less return on investment than IMC SA. But when comparing it to its historical volatility, Saule Technologies SA is 1.31 times less risky than IMC SA. It trades about 0.2 of its potential returns per unit of risk. IMC SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,600  in IMC SA on December 26, 2024 and sell it today you would earn a total of  2,000  from holding IMC SA or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Saule Technologies SA  vs.  IMC SA

Saule Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saule Technologies SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Saule Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

IMC SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IMC SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IMC SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saule Technologies and IMC SA

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

The idea behind Saule Technologies SA and IMC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.