Correlation Between Solid State and SoftBank Group

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

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

Diversification Opportunities for Solid State and SoftBank Group

-0.67

Correlation Coefficient

Solid State  SoftBank Group

Excellent diversification

The 3 months correlation between Solid and SoftBank is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Solid State Plc and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Solid State 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 Solid State Plc are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Solid State i.e., Solid State and SoftBank Group go up and down completely randomly.

Pair Corralation between Solid State and SoftBank Group

Assuming the 90 days trading horizon Solid State Plc is expected to under-perform the SoftBank Group. In addition to that, Solid State is 2.18 times more volatile than SoftBank Group Corp. It trades about -0.06 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.02 per unit of volatility. If you would invest  901,400  in SoftBank Group Corp on October 22, 2024 and sell it today you would earn a total of  6,599  from holding SoftBank Group Corp or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.13%
Values	Daily Returns

Solid State Plc  vs.  SoftBank Group Corp

Solid State Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid State Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SoftBank Group Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SoftBank Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Solid State and SoftBank Group

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

The idea behind Solid State Plc and SoftBank Group Corp 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.