Correlation Between Sofina Socit and Compagnie

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

Diversification Opportunities for Sofina Socit and Compagnie

0.93

Correlation Coefficient

Sofina Socit  Compagnie

Almost no diversification

The 3 months correlation between Sofina and Compagnie is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Compagnie d Entreprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie d Entreprises 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie d Entreprises has no effect on the direction of Sofina Socit i.e., Sofina Socit and Compagnie go up and down completely randomly.

Pair Corralation between Sofina Socit and Compagnie

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the Compagnie. But the stock apears to be less risky and, when comparing its historical volatility, Sofina Socit Anonyme is 1.61 times less risky than Compagnie. The stock trades about -0.15 of its potential returns per unit of risk. The Compagnie d Entreprises is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Compagnie d Entreprises on September 16, 2024 and sell it today you would earn a total of  26.00  from holding Compagnie d Entreprises or generate 4.52% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Compagnie d Entreprises

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.

Compagnie d Entreprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie d Entreprises has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sofina Socit and Compagnie

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

The idea behind Sofina Socit Anonyme and Compagnie d Entreprises 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.