Correlation Between Sofina Socit and Esker SA

Can any of the company-specific risk be diversified away by investing in both Sofina Socit and Esker 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 Sofina Socit and Esker SA 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 Esker SA, you can compare the effects of market volatilities on Sofina Socit and Esker 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 Sofina Socit with a short position of Esker SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and Esker SA.

Diversification Opportunities for Sofina Socit and Esker SA

-0.3

Correlation Coefficient

Sofina Socit  Esker SA

Very good diversification

The 3 months correlation between Sofina and Esker is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Esker SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esker SA and Sofina Socit 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 Esker SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esker SA has no effect on the direction of Sofina Socit i.e., Sofina Socit and Esker SA go up and down completely randomly.

Pair Corralation between Sofina Socit and Esker SA

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the Esker SA. But the stock apears to be less risky and, when comparing its historical volatility, Sofina Socit Anonyme is 1.64 times less risky than Esker SA. The stock trades about -0.21 of its potential returns per unit of risk. The Esker SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24,000  in Esker SA on September 12, 2024 and sell it today you would earn a total of  2,000  from holding Esker SA or generate 8.33% 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.  Esker SA

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. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Esker SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sofina Socit and Esker SA

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

The idea behind Sofina Socit Anonyme and Esker 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.