Correlation Between Settlebank and Total Soft

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

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

Diversification Opportunities for Settlebank and Total Soft

-0.64

Correlation Coefficient

Settlebank  Total Soft

Excellent diversification

The 3 months correlation between Settlebank and Total is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Total Soft Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Soft Bank and Settlebank 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 Settlebank are associated (or correlated) with Total Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Soft Bank has no effect on the direction of Settlebank i.e., Settlebank and Total Soft go up and down completely randomly.

Pair Corralation between Settlebank and Total Soft

Assuming the 90 days trading horizon Settlebank is expected to under-perform the Total Soft. But the stock apears to be less risky and, when comparing its historical volatility, Settlebank is 3.98 times less risky than Total Soft. The stock trades about -0.05 of its potential returns per unit of risk. The Total Soft Bank is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  431,500  in Total Soft Bank on September 23, 2024 and sell it today you would earn a total of  450,500  from holding Total Soft Bank or generate 104.4% return on investment over 90 days.

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

Settlebank  vs.  Total Soft Bank

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Total Soft Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Total Soft sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Settlebank and Total Soft

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

The idea behind Settlebank and Total Soft Bank 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.