Correlation Between Sofina Socit and TINC Comm

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

Diversification Opportunities for Sofina Socit and TINC Comm

0.9

Correlation Coefficient

Sofina Socit  TINC Comm

Almost no diversification

The 3 months correlation between Sofina and TINC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and TINC Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TINC Comm VA 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 TINC Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TINC Comm VA has no effect on the direction of Sofina Socit i.e., Sofina Socit and TINC Comm go up and down completely randomly.

Pair Corralation between Sofina Socit and TINC Comm

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the TINC Comm. In addition to that, Sofina Socit is 1.41 times more volatile than TINC Comm VA. It trades about -0.29 of its total potential returns per unit of risk. TINC Comm VA is currently generating about -0.16 per unit of volatility. If you would invest  1,190  in TINC Comm VA on September 17, 2024 and sell it today you would lose (86.00) from holding TINC Comm VA or give up 7.23% of portfolio value over 90 days.

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

Sofina Socit Anonyme  vs.  TINC Comm VA

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.

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA 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 TINC Comm

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

The idea behind Sofina Socit Anonyme and TINC Comm VA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.