Correlation Between Sofwave Medical and One Software

Can any of the company-specific risk be diversified away by investing in both Sofwave Medical and One Software 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 Sofwave Medical and One Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sofwave Medical and One Software Technologies, you can compare the effects of market volatilities on Sofwave Medical and One Software 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 Sofwave Medical with a short position of One Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and One Software.

Diversification Opportunities for Sofwave Medical and One Software

0.34

Correlation Coefficient

Sofwave Medical  One Software

Weak diversification

The 3 months correlation between Sofwave and One is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and One Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Software Technologies and Sofwave Medical 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 Sofwave Medical are associated (or correlated) with One Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Software Technologies has no effect on the direction of Sofwave Medical i.e., Sofwave Medical and One Software go up and down completely randomly.

Pair Corralation between Sofwave Medical and One Software

Assuming the 90 days trading horizon Sofwave Medical is expected to under-perform the One Software. In addition to that, Sofwave Medical is 1.55 times more volatile than One Software Technologies. It trades about -0.17 of its total potential returns per unit of risk. One Software Technologies is currently generating about 0.42 per unit of volatility. If you would invest  529,560  in One Software Technologies on September 2, 2024 and sell it today you would earn a total of  94,740  from holding One Software Technologies or generate 17.89% return on investment over 90 days.

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

Sofwave Medical  vs.  One Software Technologies

Sofwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sofwave Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

One Software Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in One Software Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, One Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofwave Medical and One Software

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

The idea behind Sofwave Medical and One Software Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.