Correlation Between SPIE SA and Soditech

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

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

Diversification Opportunities for SPIE SA and Soditech

0.81

Correlation Coefficient

SPIE SA  Soditech

Very poor diversification

The 3 months correlation between SPIE and Soditech is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPIE SA and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and SPIE 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 SPIE SA are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of SPIE SA i.e., SPIE SA and Soditech go up and down completely randomly.

Pair Corralation between SPIE SA and Soditech

Assuming the 90 days trading horizon SPIE SA is expected to generate 0.49 times more return on investment than Soditech. However, SPIE SA is 2.04 times less risky than Soditech. It trades about 0.21 of its potential returns per unit of risk. Soditech SA is currently generating about 0.08 per unit of risk. If you would invest  2,958  in SPIE SA on December 29, 2024 and sell it today you would earn a total of  1,012  from holding SPIE SA or generate 34.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

SPIE SA  vs.  Soditech SA

SPIE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPIE SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SPIE SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Soditech SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Soditech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPIE SA and Soditech

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

The idea behind SPIE SA and Soditech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.