Correlation Between Software Acquisition and Publicis Groupe

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

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

Diversification Opportunities for Software Acquisition and Publicis Groupe

-0.6

Correlation Coefficient

Software Acquisition  Publicis Groupe

Excellent diversification

The 3 months correlation between Software and Publicis is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Publicis Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publicis Groupe SA and Software Acquisition 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 Software Acquisition Group are associated (or correlated) with Publicis Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publicis Groupe SA has no effect on the direction of Software Acquisition i.e., Software Acquisition and Publicis Groupe go up and down completely randomly.

Pair Corralation between Software Acquisition and Publicis Groupe

Given the investment horizon of 90 days Software Acquisition Group is expected to under-perform the Publicis Groupe. In addition to that, Software Acquisition is 1.99 times more volatile than Publicis Groupe SA. It trades about -0.02 of its total potential returns per unit of risk. Publicis Groupe SA is currently generating about 0.06 per unit of volatility. If you would invest  1,766  in Publicis Groupe SA on October 23, 2024 and sell it today you would earn a total of  215.00  from holding Publicis Groupe SA or generate 12.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.09%
Values	Daily Returns

Software Acquisition Group  vs.  Publicis Groupe SA

Software Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Publicis Groupe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Publicis Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Publicis Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Software Acquisition and Publicis Groupe

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

The idea behind Software Acquisition Group and Publicis Groupe 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.