Correlation Between Sofina Socit and Nyrstar NV

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

Diversification Opportunities for Sofina Socit and Nyrstar NV

-0.45

Correlation Coefficient

Sofina Socit  Nyrstar NV

Very good diversification

The 3 months correlation between Sofina and Nyrstar is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Nyrstar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyrstar 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 Nyrstar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyrstar NV has no effect on the direction of Sofina Socit i.e., Sofina Socit and Nyrstar NV go up and down completely randomly.

Pair Corralation between Sofina Socit and Nyrstar NV

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 0.32 times more return on investment than Nyrstar NV. However, Sofina Socit Anonyme is 3.16 times less risky than Nyrstar NV. It trades about 0.12 of its potential returns per unit of risk. Nyrstar NV is currently generating about -0.06 per unit of risk. If you would invest  21,720  in Sofina Socit Anonyme on December 29, 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.  Nyrstar 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.

Nyrstar NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nyrstar NV 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 basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sofina Socit and Nyrstar NV

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

The idea behind Sofina Socit Anonyme and Nyrstar 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.