Correlation Between Immobel and Softimat

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

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

Diversification Opportunities for Immobel and Softimat

0.82

Correlation Coefficient

Immobel  Softimat

Very poor diversification

The 3 months correlation between Immobel and Softimat is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Immobel and Softimat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softimat SA and Immobel 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 Immobel are associated (or correlated) with Softimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softimat SA has no effect on the direction of Immobel i.e., Immobel and Softimat go up and down completely randomly.

Pair Corralation between Immobel and Softimat

Assuming the 90 days trading horizon Immobel is expected to generate 1.23 times more return on investment than Softimat. However, Immobel is 1.23 times more volatile than Softimat SA. It trades about 0.09 of its potential returns per unit of risk. Softimat SA is currently generating about 0.07 per unit of risk. If you would invest  1,666  in Immobel on September 23, 2024 and sell it today you would earn a total of  84.00  from holding Immobel or generate 5.04% return on investment over 90 days.

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

Immobel  vs.  Softimat SA

Immobel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immobel 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.

Softimat SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softimat SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Softimat is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Immobel and Softimat

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

The idea behind Immobel and Softimat 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..