Correlation Between Sofina Socit and Wereldhav

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

Diversification Opportunities for Sofina Socit and Wereldhav

0.8

Correlation Coefficient

Sofina Socit  Wereldhav

Very poor diversification

The 3 months correlation between Sofina and Wereldhav is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Wereldhav B Sicafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wereldhav B Sicafi 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 Wereldhav. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wereldhav B Sicafi has no effect on the direction of Sofina Socit i.e., Sofina Socit and Wereldhav go up and down completely randomly.

Pair Corralation between Sofina Socit and Wereldhav

Assuming the 90 days trading horizon Sofina Socit is expected to generate 1.07 times less return on investment than Wereldhav. In addition to that, Sofina Socit is 1.62 times more volatile than Wereldhav B Sicafi. It trades about 0.02 of its total potential returns per unit of risk. Wereldhav B Sicafi is currently generating about 0.04 per unit of volatility. If you would invest  4,530  in Wereldhav B Sicafi on October 7, 2024 and sell it today you would earn a total of  200.00  from holding Wereldhav B Sicafi or generate 4.42% 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.  Wereldhav B Sicafi

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.

Wereldhav B Sicafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wereldhav B Sicafi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wereldhav 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 Wereldhav

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

The idea behind Sofina Socit Anonyme and Wereldhav B Sicafi 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 Global Correlations module to find global opportunities by holding instruments from different markets.