Correlation Between Softwareone Holding and Aluflexpack

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

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

Diversification Opportunities for Softwareone Holding and Aluflexpack

0.07

Correlation Coefficient

Softwareone Holding  Aluflexpack

Significant diversification

The 3 months correlation between Softwareone and Aluflexpack is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Softwareone Holding and Aluflexpack AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluflexpack AG and Softwareone Holding 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 Softwareone Holding are associated (or correlated) with Aluflexpack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluflexpack AG has no effect on the direction of Softwareone Holding i.e., Softwareone Holding and Aluflexpack go up and down completely randomly.

Pair Corralation between Softwareone Holding and Aluflexpack

Assuming the 90 days trading horizon Softwareone Holding is expected to under-perform the Aluflexpack. In addition to that, Softwareone Holding is 25.46 times more volatile than Aluflexpack AG. It trades about -0.11 of its total potential returns per unit of risk. Aluflexpack AG is currently generating about 0.09 per unit of volatility. If you would invest  1,445  in Aluflexpack AG on October 6, 2024 and sell it today you would earn a total of  5.00  from holding Aluflexpack AG or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Softwareone Holding  vs.  Aluflexpack AG

Softwareone Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softwareone Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aluflexpack AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluflexpack AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aluflexpack is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Softwareone Holding and Aluflexpack

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

The idea behind Softwareone Holding and Aluflexpack AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.