Correlation Between Sofina Socit and Koninklijke Vopak

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

Diversification Opportunities for Sofina Socit and Koninklijke Vopak

-0.31

Correlation Coefficient

Sofina Socit  Koninklijke Vopak

Very good diversification

The 3 months correlation between Sofina and Koninklijke is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Koninklijke Vopak NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Vopak 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 Koninklijke Vopak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Vopak has no effect on the direction of Sofina Socit i.e., Sofina Socit and Koninklijke Vopak go up and down completely randomly.

Pair Corralation between Sofina Socit and Koninklijke Vopak

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the Koninklijke Vopak. But the stock apears to be less risky and, when comparing its historical volatility, Sofina Socit Anonyme is 1.18 times less risky than Koninklijke Vopak. The stock trades about -0.1 of its potential returns per unit of risk. The Koninklijke Vopak NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,268  in Koninklijke Vopak NV on October 10, 2024 and sell it today you would earn a total of  82.00  from holding Koninklijke Vopak NV or generate 1.92% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Koninklijke Vopak 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.

Koninklijke Vopak

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Vopak NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Koninklijke Vopak is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sofina Socit and Koninklijke Vopak

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

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