Correlation Between Vicat SA and Solocal Group

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

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

Diversification Opportunities for Vicat SA and Solocal Group

0.65

Correlation Coefficient

Vicat SA  Solocal Group

Poor diversification

The 3 months correlation between Vicat and Solocal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vicat SA and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group SA and Vicat SA 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 Vicat SA are associated (or correlated) with Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Vicat SA i.e., Vicat SA and Solocal Group go up and down completely randomly.

Pair Corralation between Vicat SA and Solocal Group

Assuming the 90 days trading horizon Vicat SA is expected to generate 0.63 times more return on investment than Solocal Group. However, Vicat SA is 1.58 times less risky than Solocal Group. It trades about 0.27 of its potential returns per unit of risk. Solocal Group SA is currently generating about 0.11 per unit of risk. If you would invest  3,615  in Vicat SA on December 30, 2024 and sell it today you would earn a total of  1,495  from holding Vicat SA or generate 41.36% return on investment over 90 days.

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

Vicat SA  vs.  Solocal Group SA

Vicat SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Solocal Group SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solocal Group SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Solocal Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vicat SA and Solocal Group

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

The idea behind Vicat SA and Solocal Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.