Correlation Between Exor NV and Sofina Socit

Can any of the company-specific risk be diversified away by investing in both Exor 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 Exor 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 Exor NV and Sofina Socit Anonyme, you can compare the effects of market volatilities on Exor 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 Exor NV with a short position of Sofina Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exor NV and Sofina Socit.

Diversification Opportunities for Exor NV and Sofina Socit

0.7

Correlation Coefficient

Exor NV  Sofina Socit

Poor diversification

The 3 months correlation between Exor and Sofina is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Exor 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 Exor 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 Exor 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 Exor NV i.e., Exor NV and Sofina Socit go up and down completely randomly.

Pair Corralation between Exor NV and Sofina Socit

Assuming the 90 days trading horizon Exor NV is expected to under-perform the Sofina Socit. In addition to that, Exor NV is 1.05 times more volatile than Sofina Socit Anonyme. It trades about -0.22 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about -0.1 per unit of volatility. If you would invest  21,920  in Sofina Socit Anonyme on September 19, 2024 and sell it today you would lose (580.00) from holding Sofina Socit Anonyme or give up 2.65% of portfolio value over 90 days.

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

Exor NV  vs.  Sofina Socit Anonyme

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 Exor NV and Sofina Socit

The main advantage of trading using opposite Exor NV and Sofina Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exor 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 Exor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.