Correlation Between Sofina Socit and Xior Student

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

Diversification Opportunities for Sofina Socit and Xior Student

0.32

Correlation Coefficient

Sofina Socit  Xior Student

Weak diversification

The 3 months correlation between Sofina and Xior is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Xior Student Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xior Student Housing 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 Xior Student. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xior Student Housing has no effect on the direction of Sofina Socit i.e., Sofina Socit and Xior Student go up and down completely randomly.

Pair Corralation between Sofina Socit and Xior Student

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 0.86 times more return on investment than Xior Student. However, Sofina Socit Anonyme is 1.16 times less risky than Xior Student. It trades about 0.14 of its potential returns per unit of risk. Xior Student Housing is currently generating about -0.05 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	Very Weak
Accuracy	98.39%
Values	Daily Returns

Sofina Socit Anonyme  vs.  Xior Student Housing

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.

Xior Student Housing

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Sofina Socit Anonyme and Xior Student Housing 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.