Correlation Between SoftOx Solutions and Sogn Sparebank

Can any of the company-specific risk be diversified away by investing in both SoftOx Solutions and Sogn Sparebank 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 SoftOx Solutions and Sogn Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoftOx Solutions AS and Sogn Sparebank, you can compare the effects of market volatilities on SoftOx Solutions and Sogn Sparebank 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 SoftOx Solutions with a short position of Sogn Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftOx Solutions and Sogn Sparebank.

Diversification Opportunities for SoftOx Solutions and Sogn Sparebank

-0.19

Correlation Coefficient

SoftOx Solutions  Sogn Sparebank

Good diversification

The 3 months correlation between SoftOx and Sogn is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SoftOx Solutions AS and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank and SoftOx Solutions 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 SoftOx Solutions AS are associated (or correlated) with Sogn Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogn Sparebank has no effect on the direction of SoftOx Solutions i.e., SoftOx Solutions and Sogn Sparebank go up and down completely randomly.

Pair Corralation between SoftOx Solutions and Sogn Sparebank

Assuming the 90 days trading horizon SoftOx Solutions AS is expected to generate 9.8 times more return on investment than Sogn Sparebank. However, SoftOx Solutions is 9.8 times more volatile than Sogn Sparebank. It trades about 0.14 of its potential returns per unit of risk. Sogn Sparebank is currently generating about 0.04 per unit of risk. If you would invest  1.40  in SoftOx Solutions AS on December 30, 2024 and sell it today you would earn a total of  2.66  from holding SoftOx Solutions AS or generate 190.0% return on investment over 90 days.

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

SoftOx Solutions AS  vs.  Sogn Sparebank

SoftOx Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoftOx Solutions AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, SoftOx Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Sogn Sparebank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sogn Sparebank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sogn Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SoftOx Solutions and Sogn Sparebank

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

The idea behind SoftOx Solutions AS and Sogn Sparebank 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.