Correlation Between VGP NV and Sofina Socit

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

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

Diversification Opportunities for VGP NV and Sofina Socit

0.94

Correlation Coefficient

VGP NV  Sofina Socit

Almost no diversification

The 3 months correlation between VGP and Sofina is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV 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 VGP NV 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 VGP NV 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 VGP NV i.e., VGP NV and Sofina Socit go up and down completely randomly.

Pair Corralation between VGP NV and Sofina Socit

Assuming the 90 days trading horizon VGP NV is expected to under-perform the Sofina Socit. In addition to that, VGP NV is 1.74 times more volatile than Sofina Socit Anonyme. It trades about -0.19 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about -0.21 per unit of volatility. If you would invest  24,860  in Sofina Socit Anonyme on September 12, 2024 and sell it today you would lose (3,280) from holding Sofina Socit Anonyme or give up 13.19% of portfolio value over 90 days.

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

VGP NV  vs.  Sofina Socit Anonyme

VGP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VGP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with VGP NV and Sofina Socit

The main advantage of trading using opposite VGP NV and Sofina Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV 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 VGP NV 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.