Correlation Between Softronic and Cint Group

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

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

Diversification Opportunities for Softronic and Cint Group

0.67

Correlation Coefficient

Softronic  Cint Group

Poor diversification

The 3 months correlation between Softronic and Cint is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Cint Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cint Group AB and Softronic 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 Softronic AB are associated (or correlated) with Cint Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cint Group AB has no effect on the direction of Softronic i.e., Softronic and Cint Group go up and down completely randomly.

Pair Corralation between Softronic and Cint Group

Assuming the 90 days trading horizon Softronic AB is expected to generate 0.53 times more return on investment than Cint Group. However, Softronic AB is 1.88 times less risky than Cint Group. It trades about -0.07 of its potential returns per unit of risk. Cint Group AB is currently generating about -0.35 per unit of risk. If you would invest  2,370  in Softronic AB on October 6, 2024 and sell it today you would lose (35.00) from holding Softronic AB or give up 1.48% of portfolio value over 90 days.

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

Softronic AB  vs.  Cint Group AB

Softronic AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Softronic AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Softronic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cint Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cint Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cint Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Softronic and Cint Group

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

The idea behind Softronic AB and Cint Group AB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.