Correlation Between SOFTWARE MANSION and Esotiq Henderson

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

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

Diversification Opportunities for SOFTWARE MANSION and Esotiq Henderson

-0.08

Correlation Coefficient

SOFTWARE MANSION  Esotiq Henderson

Good diversification

The 3 months correlation between SOFTWARE and Esotiq is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Esotiq Henderson SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esotiq Henderson and SOFTWARE MANSION 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 MANSION SPOLKA are associated (or correlated) with Esotiq Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esotiq Henderson has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Esotiq Henderson go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Esotiq Henderson

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to generate 1.34 times more return on investment than Esotiq Henderson. However, SOFTWARE MANSION is 1.34 times more volatile than Esotiq Henderson SA. It trades about 0.06 of its potential returns per unit of risk. Esotiq Henderson SA is currently generating about -0.05 per unit of risk. If you would invest  3,090  in SOFTWARE MANSION SPOLKA on December 1, 2024 and sell it today you would earn a total of  210.00  from holding SOFTWARE MANSION SPOLKA or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Esotiq Henderson SA

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTWARE MANSION SPOLKA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SOFTWARE MANSION may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Esotiq Henderson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esotiq Henderson SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esotiq Henderson is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SOFTWARE MANSION and Esotiq Henderson

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

The idea behind SOFTWARE MANSION SPOLKA and Esotiq Henderson 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.