Correlation Between B3 Consulting and Softronic

Can any of the company-specific risk be diversified away by investing in both B3 Consulting and Softronic 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 B3 Consulting and Softronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B3 Consulting Group and Softronic AB, you can compare the effects of market volatilities on B3 Consulting and Softronic 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 B3 Consulting with a short position of Softronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 Consulting and Softronic.

Diversification Opportunities for B3 Consulting and Softronic

-0.71

Correlation Coefficient

B3 Consulting  Softronic

Pay attention - limited upside

The 3 months correlation between B3 Consulting and Softronic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding B3 Consulting Group and Softronic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softronic AB and B3 Consulting 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 B3 Consulting Group are associated (or correlated) with Softronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softronic AB has no effect on the direction of B3 Consulting i.e., B3 Consulting and Softronic go up and down completely randomly.

Pair Corralation between B3 Consulting and Softronic

Assuming the 90 days horizon B3 Consulting Group is expected to under-perform the Softronic. In addition to that, B3 Consulting is 1.29 times more volatile than Softronic AB. It trades about -0.16 of its total potential returns per unit of risk. Softronic AB is currently generating about 0.12 per unit of volatility. If you would invest  2,200  in Softronic AB on September 3, 2024 and sell it today you would earn a total of  235.00  from holding Softronic AB or generate 10.68% return on investment over 90 days.

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

B3 Consulting Group  vs.  Softronic AB

B3 Consulting Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B3 Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Softronic AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Softronic AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Softronic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with B3 Consulting and Softronic

The main advantage of trading using opposite B3 Consulting and Softronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 Consulting position performs unexpectedly, Softronic 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 Softronic will offset losses from the drop in Softronic's long position.

The idea behind B3 Consulting Group and Softronic AB 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.