Correlation Between Ultimovacs ASA and SoftOx Solutions

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

By analyzing existing cross correlation between Ultimovacs ASA and SoftOx Solutions AS, you can compare the effects of market volatilities on Ultimovacs ASA and SoftOx Solutions 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 Ultimovacs ASA with a short position of SoftOx Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultimovacs ASA and SoftOx Solutions.

Diversification Opportunities for Ultimovacs ASA and SoftOx Solutions

0.61

Correlation Coefficient

Ultimovacs ASA  SoftOx Solutions

Poor diversification

The 3 months correlation between Ultimovacs and SoftOx is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ultimovacs ASA and SoftOx Solutions AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftOx Solutions and Ultimovacs ASA 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 Ultimovacs ASA are associated (or correlated) with SoftOx Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftOx Solutions has no effect on the direction of Ultimovacs ASA i.e., Ultimovacs ASA and SoftOx Solutions go up and down completely randomly.

Pair Corralation between Ultimovacs ASA and SoftOx Solutions

Assuming the 90 days trading horizon Ultimovacs ASA is expected to generate 0.88 times more return on investment than SoftOx Solutions. However, Ultimovacs ASA is 1.13 times less risky than SoftOx Solutions. It trades about -0.05 of its potential returns per unit of risk. SoftOx Solutions AS is currently generating about -0.12 per unit of risk. If you would invest  283.00  in Ultimovacs ASA on August 31, 2024 and sell it today you would lose (80.00) from holding Ultimovacs ASA or give up 28.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Ultimovacs ASA  vs.  SoftOx Solutions AS

Ultimovacs ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultimovacs ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SoftOx Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftOx Solutions AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ultimovacs ASA and SoftOx Solutions

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

The idea behind Ultimovacs ASA and SoftOx Solutions AS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..