Correlation Between Sofina Socit and Warehouses

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

Diversification Opportunities for Sofina Socit and Warehouses

0.49

Correlation Coefficient

Sofina Socit  Warehouses

Very weak diversification

The 3 months correlation between Sofina and Warehouses is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw 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 Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Sofina Socit i.e., Sofina Socit and Warehouses go up and down completely randomly.

Pair Corralation between Sofina Socit and Warehouses

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 0.93 times more return on investment than Warehouses. However, Sofina Socit Anonyme is 1.07 times less risky than Warehouses. It trades about 0.14 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about 0.01 per unit of risk. If you would invest  21,780  in Sofina Socit Anonyme on November 28, 2024 and sell it today you would earn a total of  2,340  from holding Sofina Socit Anonyme or generate 10.74% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Warehouses de Pauw

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 10 (%) 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 March 2025.

Warehouses de Pauw

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Warehouses de Pauw are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Warehouses 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 Warehouses

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

The idea behind Sofina Socit Anonyme and Warehouses de Pauw 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.