Correlation Between Soitec SA and Cerinnov Group

Can any of the company-specific risk be diversified away by investing in both Soitec SA and Cerinnov Group 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 Soitec SA and Cerinnov Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soitec SA and Cerinnov Group SA, you can compare the effects of market volatilities on Soitec SA and Cerinnov Group 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 Soitec SA with a short position of Cerinnov Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soitec SA and Cerinnov Group.

Diversification Opportunities for Soitec SA and Cerinnov Group

-0.24

Correlation Coefficient

Soitec SA  Cerinnov Group

Very good diversification

The 3 months correlation between Soitec and Cerinnov is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Soitec SA and Cerinnov Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerinnov Group SA and Soitec SA 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 Soitec SA are associated (or correlated) with Cerinnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerinnov Group SA has no effect on the direction of Soitec SA i.e., Soitec SA and Cerinnov Group go up and down completely randomly.

Pair Corralation between Soitec SA and Cerinnov Group

Assuming the 90 days trading horizon Soitec SA is expected to under-perform the Cerinnov Group. But the stock apears to be less risky and, when comparing its historical volatility, Soitec SA is 3.37 times less risky than Cerinnov Group. The stock trades about -0.06 of its potential returns per unit of risk. The Cerinnov Group SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Cerinnov Group SA on October 7, 2024 and sell it today you would earn a total of  4.00  from holding Cerinnov Group SA or generate 5.71% return on investment over 90 days.

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

Soitec SA  vs.  Cerinnov Group SA

Soitec SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cerinnov Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerinnov Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Soitec SA and Cerinnov Group

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

The idea behind Soitec SA and Cerinnov Group SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.