Correlation Between Sodexo SA and Afyren SAS

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

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

Diversification Opportunities for Sodexo SA and Afyren SAS

0.51

Correlation Coefficient

Sodexo SA  Afyren SAS

Very weak diversification

The 3 months correlation between Sodexo and Afyren is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Afyren SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyren SAS and Sodexo 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 Sodexo SA are associated (or correlated) with Afyren SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyren SAS has no effect on the direction of Sodexo SA i.e., Sodexo SA and Afyren SAS go up and down completely randomly.

Pair Corralation between Sodexo SA and Afyren SAS

Assuming the 90 days horizon Sodexo SA is expected to under-perform the Afyren SAS. But the stock apears to be less risky and, when comparing its historical volatility, Sodexo SA is 1.85 times less risky than Afyren SAS. The stock trades about -0.15 of its potential returns per unit of risk. The Afyren SAS is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Afyren SAS on December 30, 2024 and sell it today you would lose (59.00) from holding Afyren SAS or give up 26.82% of portfolio value over 90 days.

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

Sodexo SA  vs.  Afyren SAS

Sodexo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sodexo SA 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Afyren SAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afyren SAS 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sodexo SA and Afyren SAS

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

The idea behind Sodexo SA and Afyren SAS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.