Correlation Between TINC Comm and Sofina Socit

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

By analyzing existing cross correlation between TINC Comm VA and Sofina Socit Anonyme, you can compare the effects of market volatilities on TINC Comm and Sofina Socit 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 TINC Comm with a short position of Sofina Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of TINC Comm and Sofina Socit.

Diversification Opportunities for TINC Comm and Sofina Socit

-0.73

Correlation Coefficient

TINC Comm  Sofina Socit

Pay attention - limited upside

The 3 months correlation between TINC and Sofina is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding TINC Comm VA and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme and TINC Comm 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 TINC Comm VA are associated (or correlated) with Sofina Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of TINC Comm i.e., TINC Comm and Sofina Socit go up and down completely randomly.

Pair Corralation between TINC Comm and Sofina Socit

Assuming the 90 days trading horizon TINC Comm VA is expected to under-perform the Sofina Socit. But the stock apears to be less risky and, when comparing its historical volatility, TINC Comm VA is 1.55 times less risky than Sofina Socit. The stock trades about -0.04 of its potential returns per unit of risk. The Sofina Socit Anonyme is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  21,560  in Sofina Socit Anonyme on December 21, 2024 and sell it today you would earn a total of  2,120  from holding Sofina Socit Anonyme or generate 9.83% return on investment over 90 days.

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

TINC Comm VA  vs.  Sofina Socit Anonyme

TINC Comm VA

Risk-Adjusted Performance

Very Weak

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

Sofina Socit Anonyme

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sofina Socit Anonyme are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Sofina Socit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TINC Comm and Sofina Socit

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

The idea behind TINC Comm VA and Sofina Socit Anonyme 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.