Correlation Between Soitec SA and Balyo SA

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

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

Diversification Opportunities for Soitec SA and Balyo SA

-0.08

Correlation Coefficient

Soitec SA  Balyo SA

Good diversification

The 3 months correlation between Soitec and Balyo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Soitec SA and Balyo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balyo 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 Balyo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balyo SA has no effect on the direction of Soitec SA i.e., Soitec SA and Balyo SA go up and down completely randomly.

Pair Corralation between Soitec SA and Balyo SA

Assuming the 90 days trading horizon Soitec SA is expected to generate 0.91 times more return on investment than Balyo SA. However, Soitec SA is 1.1 times less risky than Balyo SA. It trades about 0.04 of its potential returns per unit of risk. Balyo SA is currently generating about 0.01 per unit of risk. If you would invest  8,415  in Soitec SA on October 22, 2024 and sell it today you would earn a total of  135.00  from holding Soitec SA or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Soitec SA  vs.  Balyo SA

Soitec SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Soitec SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Soitec SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Balyo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balyo 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 Balyo SA

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

The idea behind Soitec SA and Balyo 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.