Correlation Between Softronic and Niloerngruppen

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

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

Diversification Opportunities for Softronic and Niloerngruppen

0.81

Correlation Coefficient

Softronic  Niloerngruppen

Very poor diversification

The 3 months correlation between Softronic and Niloerngruppen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Niloerngruppen AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niloerngruppen AB Series 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 Niloerngruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niloerngruppen AB Series has no effect on the direction of Softronic i.e., Softronic and Niloerngruppen go up and down completely randomly.

Pair Corralation between Softronic and Niloerngruppen

Assuming the 90 days trading horizon Softronic AB is expected to generate 0.93 times more return on investment than Niloerngruppen. However, Softronic AB is 1.07 times less risky than Niloerngruppen. It trades about 0.12 of its potential returns per unit of risk. Niloerngruppen AB Series is currently generating about 0.04 per unit of risk. If you would invest  2,200  in Softronic AB on September 3, 2024 and sell it today you would earn a total of  235.00  from holding Softronic AB or generate 10.68% return on investment over 90 days.

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

Softronic AB  vs.  Niloerngruppen AB Series

Softronic AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Softronic AB are ranked lower than 9 (%) 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 January 2025.

Niloerngruppen AB Series

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Niloerngruppen AB Series are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Niloerngruppen is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Softronic and Niloerngruppen

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

The idea behind Softronic AB and Niloerngruppen AB Series 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.