Correlation Between Sofina Socit and Exor NV

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

Diversification Opportunities for Sofina Socit and Exor NV

0.33

Correlation Coefficient

Sofina Socit  Exor NV

Weak diversification

The 3 months correlation between Sofina and Exor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Exor NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exor NV 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 Exor NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exor NV has no effect on the direction of Sofina Socit i.e., Sofina Socit and Exor NV go up and down completely randomly.

Pair Corralation between Sofina Socit and Exor NV

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 1.19 times more return on investment than Exor NV. However, Sofina Socit is 1.19 times more volatile than Exor NV. It trades about 0.17 of its potential returns per unit of risk. Exor NV is currently generating about -0.14 per unit of risk. If you would invest  22,520  in Sofina Socit Anonyme on October 26, 2024 and sell it today you would earn a total of  2,000  from holding Sofina Socit Anonyme or generate 8.88% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Exor NV

Sofina Socit Anonyme

Risk-Adjusted Performance

6 of 100

Modest

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

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sofina Socit and Exor NV

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

The idea behind Sofina Socit Anonyme and Exor NV 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.