Correlation Between Broadpeak and Soditech

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

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

Diversification Opportunities for Broadpeak and Soditech

0.12

Correlation Coefficient

Broadpeak  Soditech

Average diversification

The 3 months correlation between Broadpeak and Soditech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Broadpeak 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 Broadpeak SA 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 Broadpeak i.e., Broadpeak and Soditech go up and down completely randomly.

Pair Corralation between Broadpeak and Soditech

Assuming the 90 days trading horizon Broadpeak SA is expected to under-perform the Soditech. But the stock apears to be less risky and, when comparing its historical volatility, Broadpeak SA is 1.17 times less risky than Soditech. The stock trades about -0.29 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  127.00  in Soditech SA on September 13, 2024 and sell it today you would lose (2.00) from holding Soditech SA or give up 1.57% of portfolio value over 90 days.

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

Broadpeak SA  vs.  Soditech SA

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA 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.

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 Broadpeak and Soditech

The main advantage of trading using opposite Broadpeak and Soditech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadpeak 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 Broadpeak SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.