Correlation Between Nyrstar NV and Softimat

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

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

Diversification Opportunities for Nyrstar NV and Softimat

-0.57

Correlation Coefficient

Nyrstar NV  Softimat

Excellent diversification

The 3 months correlation between Nyrstar and Softimat is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nyrstar NV and Softimat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softimat SA and Nyrstar 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 Nyrstar NV 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 Nyrstar NV i.e., Nyrstar NV and Softimat go up and down completely randomly.

Pair Corralation between Nyrstar NV and Softimat

Assuming the 90 days trading horizon Nyrstar NV is expected to generate 4.24 times more return on investment than Softimat. However, Nyrstar NV is 4.24 times more volatile than Softimat SA. It trades about 0.14 of its potential returns per unit of risk. Softimat SA is currently generating about -0.02 per unit of risk. If you would invest  4.00  in Nyrstar NV on September 23, 2024 and sell it today you would earn a total of  3.28  from holding Nyrstar NV or generate 82.0% return on investment over 90 days.

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

Nyrstar NV  vs.  Softimat SA

Nyrstar NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nyrstar NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nyrstar NV reported solid returns over the last few months and may actually be approaching a breakup point.

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 Nyrstar NV and Softimat

The main advantage of trading using opposite Nyrstar NV and Softimat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nyrstar NV 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 Nyrstar NV 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.