Correlation Between Sodexo SA and Eurofins Scientific

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

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

Diversification Opportunities for Sodexo SA and Eurofins Scientific

-0.82

Correlation Coefficient

Sodexo SA  Eurofins Scientific

Pay attention - limited upside

The 3 months correlation between Sodexo and Eurofins is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Eurofins Scientific SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurofins Scientific 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 Eurofins Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurofins Scientific has no effect on the direction of Sodexo SA i.e., Sodexo SA and Eurofins Scientific go up and down completely randomly.

Pair Corralation between Sodexo SA and Eurofins Scientific

Assuming the 90 days horizon Sodexo SA is expected to generate 0.69 times more return on investment than Eurofins Scientific. However, Sodexo SA is 1.44 times less risky than Eurofins Scientific. It trades about 0.03 of its potential returns per unit of risk. Eurofins Scientific SE is currently generating about -0.05 per unit of risk. If you would invest  7,820  in Sodexo SA on September 14, 2024 and sell it today you would earn a total of  150.00  from holding Sodexo SA or generate 1.92% return on investment over 90 days.

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

Sodexo SA  vs.  Eurofins Scientific SE

Sodexo SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sodexo SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sodexo SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurofins Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurofins Scientific SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sodexo SA and Eurofins Scientific

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

The idea behind Sodexo SA and Eurofins Scientific SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.