Correlation Between Sofina Socit and TKH Group

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

Diversification Opportunities for Sofina Socit and TKH Group

0.83

Correlation Coefficient

Sofina Socit  TKH Group

Very poor diversification

The 3 months correlation between Sofina and TKH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and TKH Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKH Group 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 TKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKH Group NV has no effect on the direction of Sofina Socit i.e., Sofina Socit and TKH Group go up and down completely randomly.

Pair Corralation between Sofina Socit and TKH Group

Assuming the 90 days trading horizon Sofina Socit is expected to generate 4.03 times less return on investment than TKH Group. But when comparing it to its historical volatility, Sofina Socit Anonyme is 2.06 times less risky than TKH Group. It trades about 0.16 of its potential returns per unit of risk. TKH Group NV is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  3,100  in TKH Group NV on October 10, 2024 and sell it today you would earn a total of  386.00  from holding TKH Group NV or generate 12.45% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  TKH Group NV

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 latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

TKH Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TKH Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sofina Socit and TKH Group

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

The idea behind Sofina Socit Anonyme and TKH Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.