Correlation Between Sopra Steria and Union Technologies

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

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

Diversification Opportunities for Sopra Steria and Union Technologies

-0.11

Correlation Coefficient

Sopra Steria  Union Technologies

Good diversification

The 3 months correlation between Sopra and Union is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sopra Steria Group and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Technologies and Sopra Steria 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 Sopra Steria Group are associated (or correlated) with Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of Sopra Steria i.e., Sopra Steria and Union Technologies go up and down completely randomly.

Pair Corralation between Sopra Steria and Union Technologies

Assuming the 90 days trading horizon Sopra Steria Group is expected to under-perform the Union Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Sopra Steria Group is 1.09 times less risky than Union Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The Union Technologies Informatique is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Union Technologies Informatique on September 26, 2024 and sell it today you would lose (1.00) from holding Union Technologies Informatique or give up 4.76% of portfolio value over 90 days.

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

Sopra Steria Group  vs.  Union Technologies Informatiqu

Sopra Steria Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sopra Steria Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Union Technologies

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Technologies Informatique are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Union Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sopra Steria and Union Technologies

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

The idea behind Sopra Steria Group and Union Technologies Informatique 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.