Correlation Between Ubisoft Entertainment and Soditech

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

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

Diversification Opportunities for Ubisoft Entertainment and Soditech

0.24

Correlation Coefficient

Ubisoft Entertainment  Soditech

Modest diversification

The 3 months correlation between Ubisoft and Soditech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Ubisoft Entertainment 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 Ubisoft Entertainment are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and Soditech go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and Soditech

Assuming the 90 days trading horizon Ubisoft Entertainment is expected to under-perform the Soditech. But the stock apears to be less risky and, when comparing its historical volatility, Ubisoft Entertainment is 1.01 times less risky than Soditech. The stock trades about -0.1 of its potential returns per unit of risk. The Soditech SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Soditech SA on October 25, 2024 and sell it today you would lose (5.00) from holding Soditech SA or give up 3.91% of portfolio value over 90 days.

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

Ubisoft Entertainment  vs.  Soditech SA

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Soditech SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ubisoft Entertainment and Soditech

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

The idea behind Ubisoft Entertainment and Soditech 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.

Check out your portfolio center.

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.