Correlation Between Ranplan and Sonetel AB

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

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

Diversification Opportunities for Ranplan and Sonetel AB

0.23

Correlation Coefficient

Ranplan  Sonetel AB

Modest diversification

The 3 months correlation between Ranplan and Sonetel is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ranplan Group and Sonetel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonetel AB and Ranplan 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 Ranplan Group are associated (or correlated) with Sonetel AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonetel AB has no effect on the direction of Ranplan i.e., Ranplan and Sonetel AB go up and down completely randomly.

Pair Corralation between Ranplan and Sonetel AB

Assuming the 90 days trading horizon Ranplan Group is expected to under-perform the Sonetel AB. But the stock apears to be less risky and, when comparing its historical volatility, Ranplan Group is 6.84 times less risky than Sonetel AB. The stock trades about -0.07 of its potential returns per unit of risk. The Sonetel AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  484.00  in Sonetel AB on September 15, 2024 and sell it today you would earn a total of  2.00  from holding Sonetel AB or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Ranplan Group  vs.  Sonetel AB

Ranplan Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ranplan Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ranplan is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sonetel AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonetel AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sonetel AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ranplan and Sonetel AB

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

The idea behind Ranplan Group and Sonetel 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.