Correlation Between Sofina Socit and GIMV NV

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

Diversification Opportunities for Sofina Socit and GIMV NV

-0.4

Correlation Coefficient

Sofina Socit  GIMV NV

Very good diversification

The 3 months correlation between Sofina and GIMV is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV 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 GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of Sofina Socit i.e., Sofina Socit and GIMV NV go up and down completely randomly.

Pair Corralation between Sofina Socit and GIMV NV

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 1.25 times more return on investment than GIMV NV. However, Sofina Socit is 1.25 times more volatile than GIMV NV. It trades about 0.12 of its potential returns per unit of risk. GIMV NV is currently generating about 0.01 per unit of risk. If you would invest  21,720  in Sofina Socit Anonyme on December 30, 2024 and sell it today you would earn a total of  2,540  from holding Sofina Socit Anonyme or generate 11.69% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  GIMV NV

Sofina Socit Anonyme

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sofina Socit Anonyme are ranked lower than 9 (%) 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 April 2025.

GIMV NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days GIMV NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GIMV NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sofina Socit and GIMV NV

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

The idea behind Sofina Socit Anonyme and GIMV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.